johnson & johnson 2007 sustainability report€¦ · employees of the johnson & johnson...

12

O U R C R E D O

We believe our first responsibility is to the doctors, nurses and patients, to mothers and

fathers and all others who use our products and services. In meeting their needs everything

we do must be of high quality. We must constantly strive to reduce our costs in order to

maintain reasonable prices. Customers’ orders must be serviced promptly and accurately.

Our suppliers and distributors must have an opportunity to make a fair profit.

We are responsible to our employees, the men and women who work with us throughout

the world. Everyone must be considered as an individual. We must respect their dignity

and recognize their merit. They must have a sense of security in their jobs. Compensation

must be fair and adequate, and working conditions clean, orderly and safe. We must

be mindful of ways to help our employees fulfill their family responsibilities. Employees

must feel free to make suggestions and complaints. There must be equal opportunity

for employment, development and advancement for those qualified. We must provide

competent management, and their actions must be just and ethical.

We are responsible to the communities in which we live and work and to the world community

as well. We must be good citizens—support good works and charities and bear our fair

share of taxes. We must encourage civic improvements and better health and education.

We must maintain in good order the property we are privileged to use,

protecting the environment and natural resources.

Our final responsibility is to our stockholders. Business must make a sound profit.

We must experiment with new ideas. Research must be carried on, innovative

programs developed and mistakes paid for. New equipment must be purchased,

new facilities provided and new products launched. Reserves must be created

to provide for adverse times. When we operate according to these principles,

the stockholders should realize a fair return.

One Johnson & Johnson PlazaNew Brunswick, New Jersey 08933

JO

HN

SO

N &

JO

HN

SO

N 2

00

7 S

US

TA

INA

BIL

ITY

RE

PO

RT

2007 Sustainability Report

12

ABOUT THIS REPORT

This report discusses Johnson & Johnson’s sustainability activities and progress as of December 2007. It is our fifthannual Sustainability Report and 11th year reporting environmental progress. In developing this report, we haveconsidered employee and external feedback on the 2006Report. The feedback was derived from our contact mailbox([email protected]), non-governmental organization engagements, senior company leadership input and threeevaluations conducted by SustainAbility Inc., ClaremontMcKenna College and Ethical Corporation.

Through these and other sources, we learned that there is strong consensus that sustainability reports are rarely readcover to cover. Instead, users typically turn to a sustainabilityreport to find a discreet bit of particular information on an as-needed basis. We also learned that readers are seekingmore in-depth discussions of a company’s priority sustainability issues.

In consideration of the feedback we received, we continueto evolve our reporting. Our 2007 report begins with acomprehensive discussion of a number of key issues affectingour business, followed by a more crisp presentation

of other sustainability topics of known interest to our stakeholders. The report is augmented by information contained on our website, www.jnj.com. The primary audience for this report is external stakeholders. TheCompany has a variety of other mechanisms by which itshares sustainability progress internally.

Information presented throughout the report representsthe manufacturing and research & development facilitiesoperated by the Johnson & Johnson Family of Companies.No external manufacturing is included in our data.

GLOBAL REPORTING INIT IATIVE (GRI )

Consideration was given to the Global Reporting InitiativeSustainability Reporting Guidelines (G3) in the preparation of this report. On the inside back cover, we provide an index with references to G3 indicators; however, we do not declare a reporting level at this time.

FEEDBACK AND FURTHER INFORMATION

We invite your comments on our sustainability activities and this report by emailing us at [email protected].

2 0 0 7 S U S T A I N A B I L I T Y R E P O R T

Cov

er P

hot

ogra

ph ©

Dav

id S

tubb

s/A

uro

ra/G

etty

Im

ages

TA B L E O F C O N T E N T S

Chairman’s Message 12007 Sustainability Summary 2About Johnson & Johnson 3Profiles in Commitment 5More About our Business Practices 22More About our Workplace Practices 24More About our Environmental Practices 28More About our Charitable Giving 34Beyond the Data 36Recognitions, Data and GRI Index 39

Caring for the world...one person at a time™

inspires and unites the people of Johnson & Johnson.We embrace research and science – bringing innovative ideas,

products and services to advance the health and well-being of people.

Employees of the Johnson & Johnson Family of Companies

work with partners in health care to touch the lives of over

a billion people every day, throughout the world.

41

I N D E X

All products and programs that appear in capital letters with the TM symbol are trademarks or service marks of Johnson & Johnson and its affiliate companies.

Other products and programs that appear in lower case letter with the TM symbol are the property of other companies and organizations.

© Johnson & Johnson 2008

“Checkmark-and-tree” logo ©1996 Forest Stewardship Council

Cert no. SW-COC-1340

This report is printed on Forest Stewardship Council (FSC) – certified paper. The paper contains 50% recycled content including 25% post-consumer waste and it is elemental chlorine free.

Printed by Pictorial Offset Corporation, an ISO 14001-Environmental Management Systems company.

KEYWORD PAGE(S)

access to health care 2, 5-7, 13accountability 11, 12animal welfare 13, 15benchmarking 22, 25, 27benefits, employee 24-25biodiversity 28, 36business conduct 10, 12, 22-23CEO letter 1challenges 1-2, 6-7, 11, 13, 15charitable giving 5-6, 22, 34-38climate change 1-2, 15-18, 20, 29-30collective bargaining 24community 3, 21, 34-38company profile 3-4compliance 10-11, 22, 28conservation 29contact us IFCcustomers 3, 14-15, 14, 23disaster relief 35, 37diversity 21, 24employee assistance 24-25employee health & wellness 1, 24, 26-27energy 16-18, 40environmental 2, 13-20, 28-33, 36-38equal employment opportunity 25external manufacturing 19-20financial performance 3-4, 40fleet 18, 29goals 1, 16-17, 19-20, 24-33governance 3, 23HIV/AIDS 1-3, 6-7, 26, 35, 37intellectual property 23ISO 14001 29marketing 11nanotechnology 12nursing 8-9packaging 15, 29-32partnerships 4, 7, 9, 17, 20, 22, 27, 29, 33-38pharmaceuticals in the environment 31policies 12-13, 16, 20, 22-23, 28pricing 23product safety/stewardship 13-15, 22, 32products 4, 22public policy 23recognitions 25research & development 1, 12-13safety 25, 27stakeholders IFC, 3-9, 11,25, 30, 32stem cells 12-13strategy 1, 3, 11supply chain 19-21, 29-30training 24-28transparency 1, 32transportation 18, 20, 25waste 13, 15, 33, 38water 33, 36-38

IFC: Inside Front Cover

LABOR PRACTICES

DMA 24-27LA1 3, 40LA3 25-26LA5 24LA7 25-27, 40LA8, LA10 24-27LA11 24, 27LA13 24

HUMAN RIGHTS

DMA 19, 22, 24-25HR1, HR2 19-20HR5 24HR6 19-20

SOCIETY

DMA 2-7, 10-13, 17-18, 22-23

SO1 29-31SO2, SO3 22SO5 5-6, 12-13,

17-18, 23, 27, 29

SO8 28, 40

PRODUCT RESPONSIBILITY

DMA 1, 3-4, 10-12,14-15, 22, 38

PR1 32, 38PR2 10-11PR5 4PR6 6, 40PR8 6

GLOBAL REPORTING INITIATIVE, G3

PROFILE

Strategy & analysis 1-2, 40Organization profile 3-4, 40Report parameters IFC, 3Governance BC, 3, 22-23Stakeholders 4, 6-8, 11,

14,17,22-23, 25, 27, 32

ECONOMIC

DMA 3EC1 3-4, 40EC2 18EC6 21

ENVIRONMENTAL

DMA 16, 28-33EN1 31-32EN2 30EN3 40EN5,6,7 16-18, 40EN8 33, 36, 40EN13 28-29, 36, 38EN14 28, 36EN16,18 16-18, 40EN17 18,29EN19 30EN22 33EN23 28EN26 14-15, 20,

29-31, 32, 38EN27 29-30, 32EN28 29EN29 18, 20, 29

1

ver the 121 years of Johnson & Johnson’s history,much has changed. Still, the essence of who we are, why weare here, and what we care about remains firmly grounded in the words of Our Credo (see back cover). Our Credo hasguided our actions in fulfilling our responsibilities to our customers, employees, communities, and stockholders since1943. In formulating these principles, General Robert WoodJohnson was ahead of his time. He recognized that ourCompany’s financial success depends on our ability to protectthe environment, respect our employees and be responsible tothe world community. In fact, that is sustainability: ensuringthat our customers, our employees, the communities in which we operate and the environment on which we depend,thrive with us.

Throughout its history, Johnson & Johnson has alwaysfaced business challenges. Today, these show up as as patentexpirations, increased regulatory scrutiny, the need forimproved access to our products, the productivity of researchand development, the global challenge of climate change,the role we play in a sustainable supply chain, and lifecycleissues presented by some of our products. In the face of thesechallenges, I am gratified by the degree of commitment and passion of our 119,200 employees across the Family ofCompanies. We continue to fulfill Johnson & Johnson’s socialand environmental responsibilities. It’s exhilarating to lead an organization whose employees are determined to deliverinnovations that are responsive to our responsibilities.

Going forward, Johnson and Johnson is uniquely posi-tioned to respond to the rapidly changing health care environ-ment. The innovations that are most needed — those comingfrom the convergence of science, technology and services —are the ones we are most capable of providing. We have theknow-how across our lines of business to bring completelynew solutions to market.

We can be proud of our progress. In the pages that follow, you will read about our efforts to increase access tohealth care, including a licensing agreement signed in 2007that makes our HIV/AIDS drug more affordable in Africa.We have increased the number and potential impact ofproducts in our pipeline. We made great progress in integrat-ing our acquisition, Pfizer Consumer Healthcare, and in growing our consumer line of products. And, we launched a website providing a single point of entry to our availableassistance programs to help the uninsured gain access to themedicines they need in the United States.

On the environmental front, we have long recognized thecritical interdependence between human health and the healthof our planet. We understand that environmental degradationthreatens human health, and that we have a responsibility to protect the environment. To meet our responsibilities, weestablished five-year Healthy Planet goals in the areas of

energy use, water use, paper and packaging, waste reduction,product stewardship, biodiversity, and others. The details ofour progress on these goals can be found in the body of thisreport, and on our website.

As a health care company, we feel a strong responsibility to keep our employees healthy and safe. Toward this end,we established employee Healthy People 2012 wellness goals.Our wellness program is dedicated to creating a “GlobalCulture of Health” for our employees. And in 2007, we contin-ued our tradition of sustaining workplaces that are among theworld’s safest, always striving to prevent injuries and illnesses.

In summary, I view the future as promising and exciting.We are making an enormous positive impact on the lives ofcustomers and patients, and the growth opportunities in thehealth care business are simply extraordinary. We vow to neverlose sight of the importance of what we do… caring for theworld, one person at a time. We are committed to transparent,balanced reporting of our activities, challenges and successes.I encourage you to engage with us and to challenge us.

Sincerely,

William C. WeldonChairman, Board of Directors, and Chief Executive Officer

William C. WeldonChairman, Board of Directors, and Chief Executive Officer

CHAIRMAN’S MESSAGE

OO

2 J O H N S O N & J O H N S O N 2 0 0 7 S U S TA I N A B I L I T Y R E P O R T

2007 SUSTAINABILITY SUMMARY

Our 2007 performance included a number of key successes:

BUSINESS & WORKPLACE ASPECTS

Throughout this report, we discuss challenges that will create our future opportunities, including:

• Integrated Pfizer Consumer Healthcare in the Consumer Group of Companies, generating new platforms for growth.

• Created new compliance officers in our three business segments and a central Corporate Compliance Committee.

• Launched a corporate blog, JNJ BTW (By The Way) to engage more directly with customers,employees and other stakeholders.

• Achieved a tobacco-free environment at 98 percent of our worldwide workplaces.• Enrolled our entire R&D community in LINK, a knowledge management system that enables rapid

collaboration across the entire company, linking researchers to expertise they might not have been able to identify previously.

• Expanded our current pathways for the anonymous reporting of ethical concerns to include a new,confidential website.

• Signed a royalty-free license agreement with Africa’s largest pharmaceutical manufacturer to register,package and distribute our HIV/AIDS antiretroviral drug PREZISTA™ in Sub-Saharan Africa at a price that will not exceed US$3 per day – the lowest price in the world.

• Launched the ACCESS2WELLNESS™ website, a single entry point into available U.S. assistance programs to help the uninsured gain access to the prescriptions they need.

• Implemented a retail pharmacy card through our Patient Assistance Foundation to speed access and enhance continuity of care in the United States.

• Marked the fifth year of our Campaign for Nursing’s Future™ that works to alleviate the nursing shortage in the United States. Over the life of the campaign, enrollment in nursing programs has increased 57 percent.

• Reduced our facility carbon dioxide emissions by 12.7 percent on an absolute basis when compared to a 1990 baseline.

• Opened two more solar power installations, bringing to 10 the number of such installations in our U.S.Family of Companies.

• Reduced our hazardous waste by four percent and our non-hazardous waste by six percent in the past two years.• Increased by 18 percent in 18 months, the amount of product shipped by rail instead of truck in the

U.S. and Canada.• Decreased our water consumption six percent in the past two years.

SOCIAL ASPECTS

ENVIRONMENTALASPECTS

• Ameliorating the risks that counterfeit products pose to our patients and consumers.• Sustaining the productivity of research and development.• Protecting our intellectual property rights around the world.• Balancing affordable healthcare with the costs incurred to bring new products to market.• Raising the bar for how our sales and marketing representatives interact with health care professionals.

• Improving the efficiency of our patient assistance programs to balance patient interests,health care provider needs and compliance.

• Reversing the decrease in nursing school faculty, students and professionals.• Extending our standards for ethical behavior, product quality and social responsibility

to our external manufacturers.

• Assessing the risks of pharmaceuticals and personal care products in the environment.• Continuing to reduce our environmental impacts when the most apparent and cost efficient

improvements have already been made.• Supporting stronger public policy for more responsible management of energy and the impacts

of climate change.

BUSINESS & WORKPLACE ASPECTS

SOCIAL ASPECTS

ENVIRONMENTALASPECTS

3

ABOUT JOHNSON & JOHNSON

Johnson & Johnson is the world’s most comprehensive andbroadly based manufacturer of health care products, as well asa provider of related services, for the consumer, pharmaceutical,and medical devices and diagnostics markets. Headquarteredin New Brunswick, NJ, we are a family of more than 250operating companies employing approximately 119,200 menand women in 57 countries. Listed on the New York StockExchange since 1944, under the symbol JNJ, the Company had $61.1 billion in worldwide sales during 2007.

Johnson & Johnson is organized on the principles ofdecentralized management, diversification in health care,

long-term perspectives, and shared values across our businesses.Our Credo, written more than 60 years ago (see back cover)articulates our responsibilities to patients, customers, employ-ees, communities and shareholders and inspires us to make apositive difference in the world. It serves as the framework forour sustainability strategy and activities. Most importantly,in a decentralized management structure, the Credo unifiesour employees. Throughout our many business dealings,when a course of action is not immediately clear, we look toOur Credo to guide our decision-making. Johnson & Johnsonis still remembered today for its decisions at the time of theTYLENOL® product tampering, but everyday in less dramaticways, these same values are applied everywhere we operate.

O U R B U S I N E S S S E G M E N T S

O U R S T R AT E G I C P R I N C I P L E S

B r o a d l y b a s e d i n h u m a n h e a l t h c a r e

M a n a g e d f o r t h e l o n g t e r m

D e c e n t r a l i z e d m a n a g e m e n t a p p r o a c h

P e o p l e a n d v a l u e s

C u s t o m e r s

Access to healthcareIntellectual propertyCounterfeit productsExternal manufacturingSupply chain managementAdvanced technologiesResearch & developmentAnimal welfareHealth care complianceHIV/AIDS drugsProduct stewardship

E m p l o y e e s

Safety performanceErgonomicsKnowledge managementDiversity Global wellness program HIV/AIDS initiativeFreedom of associationEmployee assistance Flexible work arrangementsTobacco-free workplaces

C o m m u n i t y

Supplier diversityForest products purchasingNursing shortageClimate changeCharitable contributionsPartnershipsBiodiversity & conservationEnvironmental literacyEnvironmental performancePackagingTransparencyBenchmarking

S h a r e h o l d e r s

Financial performanceGovernanceBusiness conductBusiness continuityPublic policy

O U R S TA K E H O L D E R S A N D T H E I R I N T E R E S T S

FAC

TS The Company has

issued dividends to

shareholders every

quarter since 1944.

Sales have increased

each year for

75 consecutive years.

Dividends have been

raised each year for


The Company has

had adjusted earnings

increases for


Medical Devicesand Diagnostics$21.7 billion

Pharmaceutical $24.9 billion

Consumer $14.5 billion*

Asia-Pacificand Africa$8.3 billion

Western Hemisphere(Excluding U.S.)

Europe $15.7 billionUnited States

$32.4 billion

$4.7 billion

2007 NET TRADE SALES BY SEGMENTTOTAL SALES $61.1 BILLION

2007 SALES BY REGION

*reflects the acquisition of Pfizer Consumer Healthcare during 2007

PERCENT INCREASE FROM 2006CONSUMER 48.3%* MEDICAL DEVICES 7.2%AND DIAGNOSTICSPHARMACEUTICAL 6.9%

PERCENT OF TOTAL SALESUNITED STATES 53% EUROPE 25%ASIA/PACIFIC AND AFRICA 14%WESTERN HEMISPHERE(excluding U.S.) 8%


ENGAGING WITH STAKEHOLDERS

Johnson & Johnson has a wide range of communicationmechanisms that enable us to solicit, hear, analyze and incor-porate the opinions of the stakeholders defined in Our Credo.Our engagement pathways include formal dialogue with individual interest groups, partnerships with non-governmentalorganizations, consumer panels and call centers, employeesurveys and active community engagement by our facilities.We do not limit stakeholder engagement to formal discussion around a table, although that is certainly a piece of our engagement process. Stakeholder engagement atJohnson & Johnson is multifaceted, intricate and constant.

In mid-2007, we expanded our engagement pathwaysthrough the launch of a corporate blog. JNJ BTW (By TheWay) has created more opportunities to dialogue directly with customers, employees and other stakeholders. OurMedia Relations staff makes blog entries a couple times perweek and topics range from comments on industry news todiscussion of our business strategies. A challenge of corporateblogging is managing the balance between transparency, legalconsiderations and protected business interests. Nonetheless,our blog has been very successful. We have been able to pro-vide the context, nuance and perspective that creates a morecomplete picture of the Company and the ensuing dialoguesare thoughtful and rich, often informing internal businessdecisions. Comments are allowed and encouraged, but alsomoderated; guidelines for acceptable content are posted onthe blog. Our goal for 2008 is to bring more internal contrib-utors to the blog, thereby increasing the breadth of topics.

Examples of other recent stakeholder interactions included a meeting with the Dogwood Alliance to discusshow Johnson & Johnson approaches forest stewardship matters, discussions with Innovest Strategic Advisors andOxfam International regarding Access to Medicines and our biannual employee Credo survey.

OUR PRODUCTS

CONSUMER

The Consumer companies of Johnson & Johnson produce products for baby and kids care, skin care, oral care, wound care and women’s health care, as well as nutritional and over-the-counter pharmaceutical products. These products are marketed principally to the general public and sold both to wholesalers and directly to independent and chain retail outlets throughout the world. Some familiar brand names areJOHNSON’S® Baby line of products, BAND-AID® Brand AdhesiveBandages, BENGAY® patches and cream, NEUTROGENA® skin and hair care products, TYLENOL® and MOTRIN®.

MEDICAL DEVICES AND DIAGNOSTICS

Our medical device companies develop, market and sell moremedical devices than any other company in the world. Thisbusiness segment includes a broad range of products used by,or under the direction, of health care professionals. Productlines include suture and mechanical wound closure products,surgical equipment and devices, wound management and infection prevention products, interventional and diagnosticcardiology products, diagnostic equipment and supplies,joint replacements and disposable contact lenses. Some familiar brand names are ACUVUE® Brand Contact Lenses and ONETOUCH® blood glucose meters.

PHARMACEUTICAL

Prescription medications from our pharmaceutical and biotechnology companies represent major strides in medicine since World War II. We market products in the following therapeutic areas: anti-fungal, anti-infective,cardiovascular, contraceptive, dermatology, gastrointestinal,hematology, immunology, neurology, oncology, pain management, psychotropic (central nervous system),urology and virology. Well known brands include REMICADE®, LEVAQUIN®, and PROCRIT®.

DELIVERING SHAREHOLDER VALUE

Johnson & Johnson is

one of only five industrial

companies with a

Triple A credit rating.

Johnson & Johnson is one of only

four U.S. industrial companies with a

Triple A credit rating in both Standard

and Poor’s and Moody’s.

Johnson & Johnson

was ranked 36th on the

2007 FORTUNE 500.

FAC

TS

Denise, Johnson & Johnson believes all peopleshould have access to high-quality health care.

How does the Company work to achieve this?

SITARIK: I’m pleased to report that in 2007, ACCESS2WELLNESS™,a platform that provides a single point of entry to our assis-tance programs, as well as links to other industry and publicprograms, was launched. Over the years, the number of patientassistance programs increased and the process of finding andnavigating them became complex. Our ACCESS2WELLNESS™

website (www.access2wellness.com) and call center aredesigned to make it easier for patients, caregivers and healthcare professionals to access available resources, evaluate eligibility, and apply for assistance. Industry patient assistanceprograms offer qualified uninsured and underinsured individuals access to more than 1,000 free or discounted prescription medications.

Additionally, for nearly two decades, Johnson & Johnsonoperating companies have provided free medicines to millionsof patients in the U.S., with more than 6.5 million units

For the world’s largest health care company, sustainability has a wide range of meanings. It means

maximizing the opportunity for low-income patients — including those in the least-developed

countries — to get affordable access to life-sustaining therapies. It means supporting health

care professionals. It means adhering to the strictest standards of regulatory compliance. It means

conducting responsible research. It means finding ways to do business without degrading

environmental quality. And it means much more.

Indeed, sustainability means a commitment to improving environmental quality while promoting

social equity. In years to come, nothing less will be required of the world’s best corporate citizens.

To put a human face on our commitment to sustainability, we interviewed a group of

Johnson & Johnson employees about their goals, their challenges, and their recent activities,

particularly those that involve engagement with stakeholders.

P R O F I L E S I N C O M M I T M E N T


Improving Access to Health Care

Q:

5P R O F I L E S I N C O M M I T M E N T

Sus

Sustainability at Johnson & Johnson means we recognize our role in connecting

underserved patients who need assistance, with our health care products.There are multiple ways to address this gap, including patient assistance programs, philanthropy, support for sound public policies on health care,

and the furtherance of strong infrastructure to deliver health care.There is no single solution, but improved access ultimately lies in a combination ofapproaches, innovative products and caring businesses. We spoke to two employeeswho are passionate about our sustainability activities related to access. Denise Sitarik,Vice President, Janssen-Ortho Patient Assistance Foundation has a U.S. perspective.Julie McHugh, Company Group Chairman, Virology offered the global perspective.

distributed in the past five years. The Janssen-Ortho PatientAssistance Foundation (JOPAF) — a private, independentfoundation — provides pharmaceutical products donated bythe Johnson & Johnson Family of Companies, free of charge,to eligible patients who have no public or private prescriptioninsurance. Over the past five years, JOPAF has provided freemedicines to nearly one million patients.

We also recently implemented a pharmacy card that allows patients to obtain their medicine at a retail drug store.This not only helps patients obtain medicine quickly, but it also provides enhanced continuity of care for the patients accessing medicine through our programs.

How do these Company approaches intersectwith other industry approaches?

SITARIK: Johnson & Johnson played a key leadership role in the development and implementation of a program calledPartnership for Prescription Assistance (PPA). Launchednationally in 2004, it is the largest private sector program in the U.S. to help patients who lack prescription coverageobtain access to all industry patient assistance programs andpublic programs through a single point of entry. Through the PPA, patients can access more than 475 public and privatepatient assistance programs and 1,000 brand and genericmedicines. The PPA has matched almost five million patientswith programs to assist them in accessing medicines.In addition, our operating companies participate in the Together Rx Access™ Card, which provides uninsured people meeting certain eligibility requirements with savings of 25-40 percent on hundreds of prescription drugs and products, including most of the prescription drugs made by our operating companies.

Who benefits from these programs?

SITARIK: Certainly, patients are the most direct beneficiaries,but in general, society and family members benefit also.When people are healthy, they contribute more to society ingeneral. This enhances the quality of their lives and the lives of people around them. We find many people are only lookingfor temporary assistance, possibly because they’ve lost theirjob and can’t afford insurance. It is often short-term support until they can get back on their feet.

Long-term, when we provide medicine to patients for a

chronic condition, it may prevent having that person show up in an emergency room at an increased cost of care. Overall,the program helps to avoid a tremendous burden of costs in the health care system. If we prevent one hospitalization by giving a patient free medicine, we eliminate thousands of dollars for a two-day hospital stay. So, potentially, we’re helping to keep patients out of hospital charity programs andgiving them both a boost in quality of life and the ability tocontribute more to society, which enhances self-esteem.It’s a win-win.

What are your biggest challenges — and how are you meeting them?

SITARIK: A constant challenge is to manage patient assistanceprograms more efficiently, in the best interest of the patient.This requires that we balance health care provider needs whilemanaging within the governance of health care compliance,government and regulatory guidelines. The need to balancepatient privacy with adequate information for the doctors and pharmacists involved in patient care is imperative. Morerecently, we are seeing the development of new state-level laws that govern the labeling of drugs to protect their integrityduring transport. And we find that many states have vastlydifferent regulations. We must make sure that the way we distribute drugs addresses the strictest requirements in place,so as to expedite the delivery of medicines to patients.

Let’s turn to the international perspective on access to health care. Julie, what are the

Company’s goals for worldwide access?

MCHUGH: As other companies in this arena have done, wemade the commitment, through our Global Access Program,to make those HIV medicines that are approved in the U.S.and Europe accessible and affordable in developing countrieshardest hit by AIDS. Our goals further and center on four pillars in the response to global infectious disease. In 2007, welaunched a new program — the Tibotec-Virco Partnershipsfor Global Health Innovation — that responds to these pillars.

Our first goal focuses on development strategy. We havecompounds in our pipeline, such as a tuberculosis drug candi-date, that could make major contributions to treatment indeveloping countries where infectious disease is endemic. Wewill apply our development talents to bringing forward com-pounds that address these needs, and do it in partnership withthe global public health community so that it’s a no-lose situ-ation. For example, if we could find a new treatment regimenthat effectively treats or even cures tuberculosis, we would beable to help impacted nations strengthen both the health oftheir citizens and free up the capacity of their public healthsystems to tackle other health priorities. This, in turn, enablesthem to grow socially and economically more quickly, withthe potential of becoming important future markets.

The second overall goal concerns prevention. We will beapplying our product portfolio, especially our HIV portfolio,in novel ways to look at prevention strategies as well as treat-ment. All antiretroviral drugs brought onto the market today

Denise SitarikVice President

Janssen-Ortho PatientAssistance Foundation

Q:

Q:

Q:

Q:


have been designed for treatment. However, we are collaboratingwith partners to evaluate whether products in our portfolio could be used in different formulations and combinationsthat could help prevent infection in the first place, such as microbicides or pre-exposure prophylaxis regimens.

Our third goal centers on drug resistance. Our Virco subsidiary is a diagnostic company that is the leading resistance expert in the world, with robust data reflecting hundreds of thousands of patient samples that help us detectpatterns of resistance. We will be partnering with governmentaland non-governmental organizations to help them measureresistance patterns in large multinational treatment accessprograms. This will allow policymakers and physicians tomake better informed choices on which drug regimens aremost likely to work in their parts of the world.

Our fourth goal is to develop pediatric formulations for all of our HIV/AIDS drugs. We are interested in working withother drug companies, and other organizations with a particularinterest in this area, to share our learning and identify strategiesthat are particularly focused on children.

What are your major challenges?

MCHUGH: One of the biggest challenges is the need to makesecond- and third-line antiretroviral drugs more accessibleand affordable to treatment-experienced HIV/AIDS patientswhose existing regimens fail. As part of our Global AccessProgram, in 2007 we signed a royalty-free, non-exclusivelicense agreement with Aspen, Africa’s largest pharmaceuticalmanufacturer. Aspen has four manufacturing sites in South Africa and one in India. Under the agreement, Aspenregisters, packages and distributes the protease inhibitorPREZISTA™ (darunavir) in Sub-Saharan Africa. Tibotec selected Aspen because of that company’s extensive Africandistribution network and pioneering endeavors in enhancingaccess to AIDS treatment in resource-constrained settings.Aspen and Tibotec share responsibility for ensuring promptand affordable access to patients in the Sub-Saharan region.There will be a single product, distributed by Aspen and soldto the patient at a price that is not to exceed $3 per day — the lowest price in the world. In essence, Aspen is Tibotec’s local partner in expediting pre-approval access, registration,and the development of sustainable supply chains to meetpatients’ needs in more than 20 countries.

Is there a degree to which the lower cost of local labor for a company like Aspen helps

bridge the gap between higher material prices and lower retail prices?

MCHUGH: Yes, that’s exactly the idea. A company like Aspen is ageneric manufacturer with a different cost structure than ours.For example, it is not an innovator company, so it has no costassociated with research, and its per-unit cost can be signifi-cantly lower. We’re also in early discussions with other “enabledpartners” in other parts of the world. These companies are inrelatively low-cost labor markets like China and India. We areexploring the possibility of partnering with them to reduce the cost of goods and pass those savings along in the form ofbroader access for patients.

Have there been any noteworthy developments in the Global Access Program, which was rolled

out in 2006?

MCHUGH: Perhaps the greatest challenge, and indeed achieve-ment, of the Global Access Program to date has been the needto make regulatory submissions in least developed countriesthat may often have weak national regulatory systems and bodies. However, we have made 20 submissions to date in Sub-Saharan African nations and other least developed countries and the program is continuing. Essentially, with the Global Access Program, we challenge ourselves to work withlocal governments on access and pricing for PREZISTA™ that both ensures that patients who need it have access and reflectsthe value it brings to the treatment of HIV. We will shortlyexpand the program beyond PREZISTA™ to our second HIVdrug, INTELENCE™, which was approved in its first market,the U.S. in January 2008.

In a longer-range development, we just filed for a new indication for PREZISTA™ use in people with HIV who are starting treatment for the first time. We fully expect that it will be used not only in treating resistance but will become the frontline protease inhibitor of choice as well. In the process, we will extend the public-private partnerships that provide patients in the developing world with affordable access to the drug.

What about infectious diseases other than HIV/AIDS?

MCHUGH: We are particularly interested in tuberculosis (TB) and are actively seeking out collaborations with public-privatedrug development partnerships (PDPs) to bring to market the first new TB compound in nearly forty years — which wasdiscovered by Johnson & Johnson scientists. We aim to marrythe expertise and creativity of the pharmaceutical industry with the public health know-how of PDPs and internationalagencies. The goal is to create a new model of drug develop-ment that prioritizes the health needs of developing countries.

We know we can’t solve all the world’s health problems onour own, but we are working hard to do our part. �

Julie McHughCompany Group Chairman

Virology

Q:

Q:

Q:

Q:



Alleviating the Nursing Shortage

Andrea, what’s going on with the supply of nurses?

HIGHAM: We are in the midst of an unprecedented nursingshortage in the United States that is expected to persist intothe foreseeable future. The U.S. Bureau of Labor Statisticsexpects more than one million vacant nursing positions by

the year 2014. According to the U.S. Health Resources andServices Administration, 44 states, plus the District ofColumbia, will be unable to meet the demand for nurses in hospitals and extended care facilities by 2020.

Some of the shortage is attributable to growing demand — more hospitals and more health care settings.

Q:


Nurses are among the most trusted professionals in the United Statesand they are a critical part of a strong health care system. From the earliest days of Johnson & Johnson, we have recognized and supported the great work of nurses who tirelessly care for patientsand their families, providing health care expertise and patient

education while comforting loved ones and showing compassion. In 2007, one ofour most successful efforts — The Campaign for Nursing’s Future™ — passed the five-year mark. We asked Andrea Higham, Director of the Campaign, to reflect on the program’s success and future.

Nurses are among the most trusted professionals in the United Statesand they are a critical part of a strong health care system. From the earliest days of Johnson & Johnson, we have recognized and supported the great work of nurses who tirelessly care for patientsand their families, providing health care expertise and patient

education while comforting loved ones and showing compassion. In 2007, one ofour most successful efforts — The Campaign for Nursing’s Future™ — passed the five-year mark. We asked Andrea Higham, Director of the Campaign, to reflect on the program’s success and future.

Andrea Higham Director of the Nursing Campaign

Johnson & Johnson

P R O F I L E S I N C O M M I T M E N T 9

But an aging nurse population is exacerbating the shortage.Related to that, there has been an alarming decrease in nursing school faculty. In 2006, a widespread shortage of nursing school faculty caused nearly 42,000 qualified applicants to be turned away from nursing programs.

Why is this situation of such concern?

HIGHAM: Well, it translates into a health care crisis that could limit patients’ access to needed health care services,particularly among vulnerable populations.A study conducted by Vanderbilt Universityfound that most nurse and non-nurserespondents (e.g., physicians) believe that the nursing shortage greatly affects communication, nurse-patient relationships,hospital bed availability, and quality of care.Fewer nurses can mean later detection ofpatient complications and more difficultymaintaining patient safety.

What is Johnson & Johnson doing about it?

HIGHAM: In the past 25 years, we have created or supporteddozens of innovative programs worldwide geared towardpracticing nurses and students who might consider enteringthe profession. When we first became aware of the nursingshortage more than five years ago, Johnson & Johnsonlaunched the Campaign for Nursing’s Future™. It is a multi-year U.S. initiative to recruit nurses and nurse educators —and to retain nurses currently in the system — by enhancingthe image of the profession and promoting educational initiatives. We have invested in advertising campaigns,recruitment materials, fund-raising programs, promotionalevents, children’s programs, scholarships, professional mentoring, and web-based educational outreach programs.

A current area of focus is the urgent need for nursingschool faculty. This year, 70 percent of the money theCampaign raises through our Promise of Nursing fundraisingevents, will go toward closing the gap between nurse facultysupply and demand. We are giving more scholarships topotential graduate nursing students. And we are seeking toattract more men and more minority groups into nursingeducation. The Campaign also continues to collaborate withprofessional nursing organizations, schools, hospitals and

other health care groups to promote opportunities in nursing and to increase awareness of the value of the nursing profession.

You mentioned the Campaign for Nursing’sFuture is more than five years old; in fact, in

2007 the Campaign marked its fifth anniversary. Has it been successful?

HIGHAM: Yes! Since our launch in 2002, some 500,000 newnurses have entered the profession. Within that population,employment of young RNs has increased by 87,000 — representing the highest increase since 1987. Enrollment inbaccalaureate nursing programs has increased 57 percent.Through a series of fund-raising events called the Promise of Nursing Galas, we have raised over $12 million to date for undergraduate student scholarships, nurse educator fellowships and faculty development grants for nursing.

The Campaign’s first website, www.discovernursing.com, —which we created to reach prospective nursing students, — isGoogle’s top-ranked nursing website. It contains searchablelinks to nursing scholarships and accredited nursing programs.It also includes a section devoted to finding resources and tips

on how to apply for loans and scholarships.In 2007, we celebrated the relaunch of

the Campaign with the release of additionalmaterials for the nursing profession. Theseinclude new television spots, a new website,www.campaignfornursing.com, newrecruitment materials and videos. As we’vedone with all of our previous televisionspots, we are showcasing real nurses makinga real difference in the lives of theirpatients. Our new recruitment materials —Be Someone, Be A Nurse — will continue to increase awareness of the nursing

profession and will go even further to highlight the impact of nurses — to inspire someone, save someone, heal someoneand educate someone. We are particularly proud of the 2007 release of an instructional CD for nurses. Virtual NurseManager trains nurses through real-life simulations ofconflict resolution, complex patient scenarios and other challenging day-to-day situations.

What’s next for the Campaign? Are there anyplans to expand it outside of the United States?

HIGHAM: Looking ahead, we are partnering with the AmericanAssociation of Colleges of Nursing (AACN) on a new nationalscholarship program to increase the proportion of nurse faculty with minority backgrounds. The program providesfinancial assistance to underrepresented minority (URM)nursing students to facilitate their completion of graduate programs. AACN’s latest data show that only 10.5 percent offull-time nurse faculty comes from URM backgrounds.

The nursing shortage is not limited to the United States. In fact,the Campaign has already gone international, with distribution of brochures, posters, pins and other materials in 52 countries. �

Q:

Q:

Q:

Q:

“...Since our

launch in 2002,

some 500,000

new nurses have

entered the

profession.”


Ensuring Health CareCompliance

e are known all over the world for innovative, life-saving medical products and for the values we embrace in making theseproducts available to serve patient needs. Our Credo, our Policy on Business Conduct,and our Health Care Compliance Guidelines communicate our commitment to puttingpatients first. We serve our patients and advance patient care by safeguarding medicaldecision-making from both the appearance and the fact of undue and improper financial influence. We discussed this important topic with Georgia Keresty, Senior Vice President, Compliance and Regulatory Affairs, Pharmaceuticals Group.

W


W

Georgia, compliance is not new to the healthcare industry; it is a highly regulated business.

Why is it a timely and important topic?

KERESTY: It’s important to first recognize that we have manydifferent compliance areas in the Pharmaceuticals Group.We have Financial compliance. We have R&D compliance for all of our pre-clinical and clinical studies. We have Privacy compliance to ensure we protect not only ouremployees, but also the patients who use our products. Wehave compliance in the area that governs our dealings withphysicians, pharmacists and nurses. We have anti-corruptioncompliance… so you see how diverse compliance is.

But today, we are seeing changing expectations in areaswhere we have not historically received scrutiny. Recently,health care companies have experienced external pressure and review in areas where we have simply been accepted and trusted in the past, for example, how we advertise andpromote our products.

This begins to challenge not only our current thinking,but it also triggers a review of activities and practices thatwere common many years ago, when they were accepted as “industry standard”. We wantour compliance programs to meet today’s standards but to alsoremain competitive and ahead of the curve on new thinking.

How does complianceintersect with

stakeholder engagement?

KERESTY: We take pride in our relationships with external regulators and other stakeholders.A big contributor to the develop-ment of our compliance programsis the concept of partnership. Thismeans not looking at regulators as police officers, but as thoughtleaders who set broad standardsnot only for our company,but also for our industry, and sometimes for the world. Ourengagement with these and other

partners is critical. It gives Johnson & Johnson a seat at thetable when standards are shaped — and it gives us an oppor-tunity to show how we balance compliance with our businessobjectives to succeed financially while bringing innovativeproducts to patients. A productive engagement with regulatorshelps them to look at our industry, or even a particular compliance discipline, in a well rounded, balanced way.

What are the compliance challenges in the pharmaceutical sector?

KERESTY: Currently, we are facing a series of new challenges in the pharmaceutical sales and marketing arena, notably thestandards for relationships with physicians and other healthcare professionals. It is still an area that’s not well established;the standards are evolving, as litigation makes its way through the courts. To reinforce our commitment to compli-ance and to address the expansion of laws that regulate the marketing and promotion of health care products, theJohnson & Johnson Law Department developed a series ofHealth Care Regulatory Guidance Documents for Promotionaland Marketing Practices. These guidance documents help ourcompanies comply with fraud and abuse laws and handle customer transactions and relationships appropriately. They canbe found on our website and are available to all employees.

So, where does accountability for compliance lie?

KERESTY: Whether it’s a managing director, a sales representa-tive, a manufacturing operator or an information technologyprogrammer, everyone contributes to our compliance pro-gram. We all need to know the rules and how our job affectsdifferent compliance areas. There’s an understanding atJohnson & Johnson that compliance with laws and regulationsisn’t divided into small factions. It doesn’t rest with the over-

sight staff, with the EHS staff,with the product quality staff,with the privacy staff or with theaudit staff. Instead, it rests withevery single employee in theCompany. Accountability is partof everyone’s day-to-day job,regardless of his or her level andregardless of his or her job.

If we do well as a Company,that’s saying that everyone con-tributed — but if we don’t dowell, it’s not as if blame can belocalized to one individual area.Accountability can’t sit in an isolated corporate office. It’sCompany-wide, and the personalresponsibility of every employee.For us to perform well in everyarea that is compliance-based,every single person has to understand how to contribute tothat compliance performance. �

Georgia KerestySenior Vice PresidentCompliance

Pharmaceuticals Group

Q:

Q:

Q:

Q:


“Accountability can’t sit in

an isolated corporate office.

It’s Company-wide, and

the personal responsibility

of every employee. For us

to perform well in every area

that is compliance-based,

every single person

has to understand how

to contribute to that

compliance performance.”

Research is the way we discover

innovative new products thatserve our customers and grow

our business. But responsible research — ethical conduct at

all phases of discovery and development —is how we increase the level of trustaccorded to our science and thereby, ourproducts. We would not be in business very long without this trust. We spoke toHarlan Weisman, M.D., Chief Science &Technology Officer in our Medical Devices& Diagnostics business about responsibleresearch in the Johnson & Johnson Familyof Companies.

Harlan, it’s an exciting time for research and there are many new technologies and dramatic

breakthroughs. How do the operating companies ofJohnson & Johnson remain vigilant to the potential risks of these technologies?

WEISMAN: We take the responsibilities that come with new technologies very seriously. Vigilance demands that we remainattentive to many considerations; for example, environmentalimpacts, worker health and safety, patient safety, cost, andproduct quality. This requires strong internal collaborationbetween our subject and functional experts such as clinicians,environmental scientists, chemists, engineers, toxicologists,pharmacologists and others. When our own resources havelimits, we will also engage with external experts from govern-ment, academia, non-governmental organizations and tradeorganizations.

It’s important to also note; Johnson & Johnson has anEthical Code for the Conduct of Research and Development (seeour website). This code requires us to place the well-being ofthe patient first and ensure that the best interests of patientsand physicians who use our products always come first; toapply our Credo-based values and judgment to the design,conduct, analysis and interpretation of clinical studies andresults; to adhere to the principles of good clinical practice; andto challenge each other regarding medical and ethical concerns.

Nanotechnology is still quite new. Can you comment on its potential?

WEISMAN: Recent scientific advances have made it possible to work with very tiny materials measuring only one to 100 nanometers. To put that in context, a nanometer is onebillionth of a meter — or about the size of a marble whencompared to the earth. The ability to manipulate materialsand processes at the nano-level holds great hope for improv-ing the effectiveness of drug delivery to targeted sites in thebody. For example, we are investigating nanotechnology as amore efficient way to add anti-infective and anti-coagulantdrugs to implanted medical devices. In some cases, we believethat engineering at the nano-level may make the surface ofa device so infection-resistant that it wouldn’t be necessary to add an antimicrobial drug. In our laboratories, we’re studying the design features of nano-surfaces in the naturalworld — from the ultra-smoothness of a shark’s skin, to theultra-stickiness of a gecko lizard’s footpads — to see whetherwe can mimic their properties in implanted devices and surgical bandages, respectively.

All of this must be done with a measure of caution.As with all ingredients, we continually work to ensure thehighest levels of purity and safety. Our scientists participate in nanotechnology scientific forums, research the environ-mental impact of nano-sized particles, investigate productsafety, and develop advanced protective methods for workingwith nano-size material.

Stem cells have also shown promise for the treatment of many diseases. Does

Johnson & Johnson conduct stem-cell research?

WEISMAN: We have a number of active stem cell research programs in Johnson & Johnson. One of our teams is investi-gating whether stem-cell technology could be effective in


Conducting Responsible Research

Harlan Weisman, M.D.Chief Science & Technology Officer

Medical Devices &Diagnostics

Q:

Q:


Research is the way we discover

innovative new products thatserve our customers and grow

our business. But responsible research — ethical conduct at

all phases of discovery and development —is how we increase the level of trustaccorded to our science and thereby, ourproducts. We would not be in business very long without this trust. We spoke toHarlan Weisman, M.D., Chief Science &Technology Officer in our Medical Devices& Diagnostics business about responsibleresearch in the Johnson & Johnson Familyof Companies.

Harlan, it’s an exciting time for research and there are many new technologies and dramatic

breakthroughs. How do the operating companies ofJohnson & Johnson remain vigilant to the potential risks of these technologies?

WEISMAN: We take the responsibilities that come with new technologies very seriously. Vigilance demands that we remainattentive to many considerations; for example, environmentalimpacts, worker health and safety, patient safety, cost, andproduct quality. This requires strong internal collaborationbetween our subject and functional experts such as clinicians,environmental scientists, chemists, engineers, toxicologists,pharmacologists and others. When our own resources havelimits, we will also engage with external experts from govern-ment, academia, non-governmental organizations and tradeorganizations.

It’s important to also note; Johnson & Johnson has anEthical Code for the Conduct of Research and Development (seeour website). This code requires us to place the well-being ofthe patient first and ensure that the best interests of patientsand physicians who use our products always come first; toapply our Credo-based values and judgment to the design,conduct, analysis and interpretation of clinical studies andresults; to adhere to the principles of good clinical practice; andto challenge each other regarding medical and ethical concerns.

Q:

There is understandable public concern about the use of animals in research. How

does Johnson & Johnson manage animal welfare?

WEISMAN: The ethical and humane treatment of animalsrequired for scientific investigation is both a moral and regulatory responsibility. Our Policy on the Humane Care andUse of Animals for Laboratory Research encourages the conser-vation of animal resources, promotes the use of alternativetesting whenever possible, and emphasizes humane treatment.All of our facilities meet or exceed international regulationsgoverning laboratory animal care and use.

Significantly, R&D leaders at Johnson & Johnson are looking for alternatives to animal testing as a prelude to testing the safety and efficacy of our products on humans.One notable development is a transparent test chamber that allows laparoscopic surgeons to train in a technologicalmodel that closely simulates a biological environment.

What do you think is the greatest R&D challenge right now?

WEISMAN: I would have to say our greatest challenge is making exciting new medical advances and technologiesaffordable to the health care system and accessible to thosewho need it. For health care researchers, we are living in agreat time; we have accomplished unbelievable things.The mysteries of the human genome have been unraveled.The molecular basis of disease is now understood in remarkablydetailed fashion. We have developed computing technologiesthat allow us to process vast amounts of information, and we have the internet, which provides for instant connectivity.We have the ability to prevent diseases and promote health in very targeted ways. We are even in a position of curingsome diseases outright, through cellular science and biotech-nology. Research has put all these wonderful advances in our grasp, but we have to demonstrate their value and thenuse these advances to make health care products that areaffordable and accessible. �

treating blindness caused by retinal disease. We are also looking at whether stem cells could be effective in treatingdiabetes and strokes. In regenerative medicine, we are looking at whether transplanting a patient’s own tissue could regrow cartilage in damaged areas.

In recognition of the potential importance of stem cells in research and development, we have established theJohnson & Johnson Committee on Human Stem CellResearch to assure that the highest scientific and ethical standards are maintained in all research programs involvingsuch cells. The Committee’s membership includes representa-tives from Corporate Law, Corporate Communications, theCorporate Office of Science and Technology, senior leaders in R&D from around the Company, and external experts inbioethics and health care.

How does the Company factor environmentalconsiderations into its research?

WEISMAN: I’ve spoken with many leaders in our R&D organization. Our employees have really taken environmentalresponsibility to heart as a Credo-based value — and they are endeavoring to be mindful of it from the earliest stage inthe R&D continuum to the final stage of bringing a productto the marketplace. We are using Design for Environment principles, green chemistry practices and a “Safe Science”tool to design new manufacturing processes and reformulate products to reduce or eliminate the use or release ofhazardous chemicals. This protects our employees and‘greens’ the products we take to market.

There is an excellent success story in the new clinicalchemistry technology area of our Ortho-Clinical Diagnostics(OCD) business that makes diagnostic equipment such as blood analyzers. OCD is engineering water conservation,energy savings, and noise reduction into its products.We believe that OCD is the only company in the diagnosticinstrumentation industry with products that require no connection to fresh water, create no hazardous or infectiouswastewater, and contribute a minimum of noise to a lab environ-ment. In 2007, OCD also modified its reagent products to elimi-nate the use of thimerosal, a mercury-containing preservative.

Q:

Q:

Q:


Frank, what does product stewardship mean for a consumer products business?

KONINGS: Product stewardship means taking a product-centeredapproach to product safety, environmental protection andsocial responsibility. As a manufacturer, we have a long historyof protecting the environment during production by reducingwaste and controlling emissions — activities “within our fenceline”. Product stewardship means we acknowledge ourexpanded responsibility to reduce the environmental impactsof our products “outside the fenceline” such as the carbonfootprint of transporting the product and the energy that isconsumed by making the ingredients at our suppliers. It alsomeans we are considering the social impacts of producing andselling our products, such as labor conditions where we sourceour raw materials and how society is impacted by our products.

Consumers are one of your obvious stakeholders. Are there others you engage with?

KONINGS: All of our products are designed with the consumerin mind. Ultimately, the consumer makes the choice betweencompeting products. Unlike the patient with a prescription fora particular drug, the people who buy freely available productslike baby lotions and adhesive bandages have a wide range ofchoices and the option, at any time, to choose a product froma company they might perceive as more ethical or responsible.We operate customer care centers to receive consumer feedback and we also use focus groups and panels to listen to this primary stakeholder.

The Consumer Group of Companies also engages withretailers and non-governmental organizations (NGOs). As twoof our large retailers, Wal-Mart and Tesco, have adopted their

own sustainability goals, we have in effect become partnerswith them to improve the environmental profile of our products. On the NGO front, there have been a number ofmovements, including those expressing concerns about theuse of laboratory animals, the sourcing of paper products and the risks of some preservatives. We engage with thesegroups and industry peers to understand the concerns,participate in the scientific debate behind the concerns and if need be, weigh in on emerging regulations.

It seems consumer products are less regulated than pharmaceuticals and medical devices,

yet more sensitive to the opinion of your customers. Do you agree? What do you do to manage that?

KONINGS: I do agree. If there is public sensitivity about ouringredients for example, stores could refuse to stock and sellour products, which could mean lost revenue, even if the


Advancing Product Stewardship

Frank KoningsVice PresidentGlobal Markets R&D

Consumer Products

Q:

Q:

As the science grows stronger, the implications of Earth’s growing population

are becoming more clear. Natural resources are diminishing and social systems and cultures are stressed. There is growing consumer awareness

and interest in sustainability and corporate responsibility. New laws are being proposed and enacted around the world that are putting a

focus on raw material sourcing, product ingredients, packaging and other aspects ofour business that are well beyond the manufacturing process alone. We sat down with Frank Konings, Vice President, Global Markets R&D for our Consumer Productsbusiness segment to discuss the increasingly important role of product stewardship.


Q:

As the science grows stronger, the implications of Earth’s growing population

are becoming more clear. Natural resources are diminishing and social systems and cultures are stressed. There is growing consumer awareness

and interest in sustainability and corporate responsibility. New laws are being proposed and enacted around the world that are putting a

focus on raw material sourcing, product ingredients, packaging and other aspects ofour business that are well beyond the manufacturing process alone. We sat down with Frank Konings, Vice President, Global Markets R&D for our Consumer Productsbusiness segment to discuss the increasingly important role of product stewardship.

What are some of your current challenges?

KONINGS: Well, I mentioned the concernsabout the use of laboratory animals.It is aimed at the use of animals during the testing of cosmetic products. TheEuropean Union has a very stringent lawthat will become effective in 2009 thatbans any ingredient that touches an animal for use in cosmetic products.Ahead of this law, many countries andstore chains are already electing to com-ply with it and rejecting products theyregard as inappropriate or environmen-tally irresponsible. We have been movingout of animal testing and investing in alternatives, but this is not yet obviousbecause many countries continue torequire animal testing for safety purposes.

Another recent example concernsparabens. While perfectly legal as a pre-servative, NGOs have expressed concernsabout their use. We are reformulating our baby products into paraben-free formulations even though the science isequivocal. This is an example of societal pressure demanding change ahead of,or even instead of, the regulatory frame-work. Both impact the choices we make.

Do you expect your product stewardship program to return value to the business?

KONINGS: Yes, it will. There is substantial business opportunityin product stewardship. By rethinking our products, our rela-tionships with the supply chain, and the ultimate customer,we create new opportunities to increase our own productivity,reduce costs, increase employee safety, innovate, and give customers more value. An example of this would be the stan-dardization on a smaller number of raw materials. Not onlydoes it enable us, stewardship-wise, to better control materialquality (for example, trace impurities), but it also allows us tobuy larger volumes of fewer materials, thereby reducing cost.Similarly, if we can build our line of skin care products as variations around the same core formula, that will keep theoverall carbon footprint down because that formula can bemade more efficiently in larger batches. At the same time,though, this is a more cost-effective way to manufacture. �

product is meeting existing regulations. To manage theserisks, we have an emerging issues team that monitors theexternal environment to identify potential issues and we factor that knowledge into our new product research andbusiness planning. We want to proactively identify theseissues and our customer’s perspectives so we can attune ouractivities to the strictest requirements, be they legal stricturesor societal pressures.

Robust product stewardship moves us to make changesbefore legislation might force us to do so. Right now, our formulators have an electronic design system that helps them see the estimated cost of goods as they are mixing and matching different ingredients. A future expansion ofthis tool will allow us to better analyze and minimize environmental impacts early in the development process.This would enable us to weigh environmental impacts alongside cost and performance, and make better choices.

Packaging Director Renato Wakimoto

stands in the Brazil eucalyptus farm

that provides pulp for our BAND-AID®

Brand boxes. The Forest Stewardship

Council has certified the forest as being

responsibly managed.


Q:

Q:


Addressing Climate Change


Climate change is real. There is compelling evidence from the scientific community that human activity is responsible — that the greenhouse gasses (GHG) our society emits are contributing to global warming.We believe that, gone unchecked, a changing climate will pose significant

threats to human health. We have been taking action to reduce the GHG emitted from our operating companies for many years. In 1999, we set a goal to reduce GHGemissions from our facilities worldwide. This goal became the basis for our ClimateFriendly Energy Policy (see our website) that was approved by our Executive Committeein 2003. Johnson & Johnson’s Senior Director of Global Energy, Dennis Canavan,spoke with us about the Company’s commitments in this area.

Dennis, Johnson & Johnson has an aggressivegoal to reduce emissions of its primary GHG,

carbon dioxide (CO2). Are you using renewable energysources to do that?

CANAVAN: Yes, that’s one of the ways. Our goal for 2010 is tobe 7 percent below our 1990 levels in absolute terms. This is

aggressive in a growing company and achieving it requiresactions on a number of fronts. It begins with our operatingcompanies implementing engineering changes and equipmentupgrades to reduce energy consumption. Next, we look foropportunities to install cogeneration systems on our sites,whereby we generate electricity and recover the heat from theprocess to maximize the overall efficiency. We have also

Q:

Climate change is real. There is compelling evidence from the scientific community that human activity is responsible — that the greenhouse gasses (GHG) our society emits are contributing to global warming.We believe that, gone unchecked, a changing climate will pose significant

threats to human health. We have been taking action to reduce the GHG emitted from our operating companies for many years. In 1999, we set a goal to reduce GHGemissions from our facilities worldwide. This goal became the basis for our ClimateFriendly Energy Policy (see our website) that was approved by our Executive Committeein 2003. Johnson & Johnson’s Senior Director of Global Energy, Dennis Canavan,spoke with us about the Company’s commitments in this area.

solution. Longer-term, we support a mandatory cap-and-trade system that would require everyone to reduce GHGemissions and in which offsets would be regulated.

In May 2007, Johnson & Johnson became a partner in USCAP — the United States Climate

Action Partnership. What is the significance of this?

CANAVAN: USCAP is a unique coalition of U.S.-based corporations and environmental non-profit organizations that speak with one voice for good federal policy on climatechange. Together, we are asking government policymakers in the U.S. to create a mandatory, market-driven approach to climate protection. Through USCAP, we are advocating for the enaction of climate legislation that is environmentally effective, economically sustainable, fair to all economic sectors, geographic regions and stakeholders, and that creates incentives for technology innovation. Our recommendationsinclude a national cap-and-trade system that is linked to an international carbon offset market.

Our membership in USCAP was a natural fit consideringour history of advocacy regarding climate change.Johnson & Johnson was a charter member of Climate Savers(World Wildlife Fund), The Climate Group (based in theUnited Kingdom) and the Green Power Market DevelopmentGroup (World Resources Institute). We have publicly calledfor the establishment of a long-term production tax credit for renewable energy projects in the U.S. and we have sup-ported climate change legislation in California and New Jersey.In 2007, at the international level, Johnson & Johnson Vice Chairman Christine Poon signed a petition (The BaliCommunique) on the Company’s behalf urging world leaders to expedite an international agreement on cappingGHG emissions. This Communique was presented at theUnited Nations meeting on climate change in Bali.

Can you tell us about your progress? What were some of Johnson & Johnson’s notable

2007 accomplishments?

CANAVAN: From 1990 to 2007, while our worldwide salesincreased by over 400 percent, Johnson & Johnson companiescut CO2 emissions by 12.7 percent on an absolute basis.This includes the impact of RECs and carbon offsets.

Contributing to this success, we opened two more solarpower installations in 2007. ALZA Corporation in Vacaville,CA opened a 1.1-megawatt solar power system that covers 6.5 acres and will offset 17,000 tons of carbon emissions during its 25-year life. ALZA develops and manufactures drug delivery systems, and has a heavy, around-the-clockdemand for power. When the sun is shining, the solar energysystem produces about one-third of the needed power.We also opened a 0.5-megawatt solar energy system on theroof of Johnson & Johnson Pharmaceutical Research andDevelopment, LLC in Raritan, New Jersey. This was our tenthsolar installation in the U.S.

Other renewable energy projects are being implementedaround the world. Our second geothermal system is under

installed on-site systems that make use of solar, geothermal,biomass, landfill gas, and other forms of renewable energy.Another way we achieve our goal is by purchasing electricitygenerated from renewable energy and by purchasingRenewable Energy Certificates (RECs) and carbon offsets.

What’s the biggest challenge your operating companies have?

CANAVAN: Without question, it’s attaining an absolute reduc-tion of CO2 while our business continues to grow. This is thesame challenge facing all companies and countries. To avoidthe most damaging effects of climate change, experts believethat global GHG emissions must be reduced by 60-90 percentby 2050. So, as our sales increase, our GHG emissions mustbe moving in the other direction — and eventually, withouthelp from purchased RECs and offsets.

Another challenge we face is to account for the GHGemissions from our entire supply chain, as well as from theuse and disposal of our products. In the future, we would like to influence our business partners (suppliers, contractmanufacturers and carriers) to measure, report and reducetheir GHG emissions.

RECs and offsets have been a bit controversial. Why use them?

CANAVAN: We have completed many cost-effective projects to improve our efficiency and make use of renewable energy.But we have not been able to do this at the pace and scaleneeded to meet our absolute GHG reduction goal. RECs and carbon offsets provide a mechanism for us to supportrenewable energy projects on a scale that is not practical onour sites, such as large wind farms and biomass projects. Thisstrategy is consistent with a market-based, cap-and-trade system that is a fundamental part of most of the regional andinternational agreements in place to address climate change.In 2007, our operating companies spent about $1.5 millionon RECs, offsets and green power premiums. All are verifiedby a third party as being traceable to credible projects.For instance, all RECs purchased in the U.S. are “green-E certified” by the Center for Resource Solutions.

For the moment, absent universal comprehensive legislation,this voluntary system of offsets offers a reasonable short-term

Dennis CanavanSenior Director Global Energy

Johnson & Johnson

Q:

Q:

Q:


Q:

construction in Limerick, Ireland, and at a recently constructed biotechnology facility in Cork, Ireland we areinstalling the capability to use wood pellets as boiler fuel.

We are also working to improve the efficiency of the fleetof automobiles that we operate worldwide. According to astudy conducted by Automotive Fleet magazine in October2007, Johnson & Johnson has the largest corporate fleet ofhybrids in the U.S. As of March 2008, we have 978 hybrids on the road and 508 more on order. Our target is to have1,600 hybrids on the road by the end of 2008.

Health care companies do not have a large GHG ‘footprint’ relative to some other industries.

So, why has Johnson & Johnson taken such a leadingstance on climate change?

CANAVAN: According to the United Nations IntergovernmentalPanel on Climate Change, global GHG emissions fromhuman activity were 49.0 billion metric tons in 2004 (FourthAssessment Report, Climate Change 2007: Synthesis Report,Summary for Policymakers). In 2007, our operating companiesemitted less than one million metric tons of CO2 to theatmosphere from the use of fuel and electricity at our facilitiesaround the world. While our emissions are a relatively smallpart of the total, it will take the collective action of many toprevent the adverse consequences and costs of climate change.

We believe we have a responsibility in this area, even if theimpact of our efforts alone may seem insignificant comparedto the magnitude of the challenge we face. In addition to fulfilling our social responsibility, the investments we have madeto reduce CO2 emissions have returned good value to theCompany. In the last three years, through our CO2 ReductionProjects Funding Process, we have committed $97 million forthe construction of forty-nine projects, many of which arealready complete. In addition to reducing CO2 emissions by88,000 tons per year, these projects collectively will provide an Internal Rate of Return of 16.3 percent. Smart energychoices are good for the planet, and good for business. �

See page 29 for a discussion of our fleet emissions.

This 1.1-megawatt solar power system provides about one-third of the needed power for ALZA Corporation in Vacaville, CA when the sun is shining.

Q:


B Y T H E N U M B E R S

�

2�

�

7�

�

�

12.7

�

�16.3Percentage absolute

reduction of CO2 from fixed sources when compared to 1990

Solar installations at our U.S. operating

companies

Megawatts of solar power generated from our U.S. installations

Rank as a corporate user of on-site solarenergy, according to the World Resources

Institute

Percentage of our worldwide electricity use that comes from a renewable resource

Rank as a large purchaser of renewable

energy in the U.S., according to the U.S. EPA

4.1

36

10 6

�5

�4

�978

�1

Average percentage internal rate of

return from CO2

reduction projects

Consecutive years Johnson & Johnson

has received a Green Power

Partnership award from the U.S. EPA

Annual reports made to the Carbon

Disclosure Project(www.cdproject.net)

Buildings certified by LEED (www.usgbc.org/leed)

Hybrid cars on the road in the U.S. (and 508 more on order)

Rank in size of corporate hybrid fleets in the U.S. according

to Automotive Fleet Magazine,October 2007

Mike, what does it mean to have a sustainable supply chain and why is it important?

MCGRANAGHAN: Sustainability in a supply chain means we areconsidering social and environmental impacts as we managematerials and services from our suppliers to our customers.From purchasing decisions like where we source paper, to distribution and logistics decisions that could impact ourcontribution to climate change, we can use our considerablepurchasing power to influence our suppliers. Society is askingmore from us. We are increasingly being expected to ensurethat our suppliers are mindful of their environmental andsocial responsibilities, and it’s important that we provideleadership in this area.

So how sustainable is the supply chain for the Johnson & Johnson Family of Companies?

MCGRANAGHAN: Great question — and a tough one! We have some real pockets of excellence — for example,a long-term supplier diversity program, forest products purchasing guidelines, an environmentally friendly transportation program and external manufacturing standards. But in any large, global supply chain, robust sustainability is complex and rife with opportunity.Inherent in the traditional approach to business, we’re good at managing our supply chain for operational efficiency and financial performance, but I think we’re going to find a lot of opportunity as we continue to mature our sustainability efforts.

How does the Company share its values with suppliers?

MCGRANAGHAN: Because we hold ourselves to high standardsof ethical behavior, product quality and social responsibility,we want to do business with like-minded suppliers. Our purchasing agreements include an expectation of compliancewith legal requirements related to business conduct, labor and employment practices, our Employment of YoungPersons policy, and environment, health and safety (EHS) regulations. We also have Standards for Responsible ExternalManufacturing that help us select manufacturing partnerswho operate in a manner consistent with our values. At theend of 2007, we had shared these with and/or integrated theseStandards into formal contracts with more than 80 percent of our external manufacturers (EMs).


Supporting Sustainability in Our External Supply Chain

Mike McGranaghanChief Procurement Officer

Johnson & Johnson


he Johnson & Johnson Family ofCompanies operate 150 manufacturing plants around the world. However, these plantsrepresent only a fraction of our entire supply chain, a large and complex network of thousands of suppliers whose materials, products and services help us supply themarketplace with innovative healthcare products. We constantly strive to do businesswith companies that share our values for product quality, environmental protectionand social responsibility. We asked Mike McGranaghan, Chief Procurement Officer,to reflect on sustainability in our external supply chain.

T

Q:

Q:Q:

T

How do you gain a sense of comfort that yourexternal manufacturers are acting responsibly?

MCGRANAGHAN: We are using a combination of site visits,questionnaires and assessments. It’s our goal that 100 percentof our EMs will be in conformance with the Standards by2010. At the end of 2007, we had evaluated nearly 20 percentof our EMs. For the more mature aspects of our Standards(such as EHS, quality and the employment of young people),we have a high level of confidence that our EMs are in conformance. But, as we are just starting to collect dataaround labor and ethics, we are not yet able to report ourprogress towards full Standards conformance.

I want to make a point about the challenges in this wholearea. Every day, it seems we hear news of corporations thathave encountered a problem that traces back into the supplychain. It’s extraordinarily difficult to have full comfort due to the complexity of global supply chains these days. Our own mix of EMs can change from year to year, and even withour assessments, they are just a point-in-time perspective.On top of logistical challenges, assessment practices need to be adapted for differences in social norms that vary bycountry and by culture.

You mentioned environ-mental issues; can you give

some examples of how they arereflected in the supply chain?

MCGRANAGHAN: I’ll mention twoareas — purchasing forest productsand understanding the carbon footprint of our supply chain. OurForest Products Purchasing Guidelines(see our website) are relatively new.We issued them in 2006. They weredesigned to help our business andprocurement professionals makedecisions on paper products andpaper-based packaging in alignmentwith our environmental and sustain-able forestry goals. The guidelinesrecognize the need to understand thesource and content of each productand, if that source appears high-risk,to verify its legality. We recommendthat our business and procurementprofessionals seek products with more than 30 percent recycled content, products with fiber from certified forests,and products manufactured with chlorine-free processes.

At this early juncture, our more than 250 operating com-panies are at many different stages along the implementationpath. Befitting the operating freedom that is characteristic ofJohnson & Johnson’s decentralized business model, the guide-lines for forest product purchasing are broad enough to allowflexibility in application across our operating companies.

What’s going on relative to the carbon footprintof your supply chain?

MCGRANAGHAN: We have begun partnering with our GlobalEnergy group to address an issue that is just cresting the horizon — how to measure and manage the carbon footprintof our external manufacturers and our products. We routinelyaccount for the environmental impact of our own facilitiesand those we lease. However, at this point, we don’t captureinformation from our suppliers to account for the portion of their emissions that result from the manufacture of ourproducts. Parenthetically, few large companies do; it’s quite adifficult task. It’s our hope, moving forward, to encourage oursuppliers to be transparent about their own carbon emissions.

What is the Company doing regarding transportation of its goods?

MCGRANAGHAN: The Global Transportation Organization(GTO), a division of the Johnson & Johnson Sales andLogistics Company, LLC that handles shipping for our threebusiness segments, is participating in the U.S. Environmental

Protection Agency’s SmartWay program. SmartWay is a voluntarycollaboration to increase transportationenergy efficiency while significantlyreducing greenhouse gases and airpollution. GTO’s accomplishmentshave been pretty impressive. First, inthe U.S. and Canada, they increasedthe amount of business shipped byrail, instead of by truck, by 18 percentfrom mid-2006 to year-end 2007,thereby decreasing net emissions.Second, they began encouraging carriers to become SmartWay shippers, and used SmartWay participation as a factor in the selection of carriers. In 18 months,GTO increased the amount ofbusiness awarded to SmartWay carriers by 30 percent. GTO gave 73 percent of its business toSmartWay carriers in 2007. In partnership with GTO, the Sales andLogistics Company has reduced the total number of truck shipments

by more efficiently utilizing trucks and filling trailers.There is a very exciting technology that has also resulted

in remarkable emission reductions. Carriers are retrofittingtheir trailer trucks with double-wide tires, which reduce thenumber of tires from 18 to 10 and correspondingly boosts thetruck’s fuel efficiency. One household-name carrier GTO ishelping to become SmartWay-certified has increased its truckmiles per gallon to 7.1 from 6.1 through installing double-wide tires and speed governors on its trucks. In the truckingindustry, that translates into direct reductions in fuel costsand associated CO2 emissions.


Q:

Q:

Q:

Q:

“We have begun

partnering with our

Global Energy group

to address an issue

that is just cresting

the horizon — how

to measure and manage

the carbon footprint

of our external

manufacturers and

our products.”

Earlier, you mentioned supplier diversity as a pocketof excellence. Can you tell us more about it?

MCGRANAGHAN: Supplier diversity is a mature program that has been widely implemented and already has a longtrack record of success. Since the program was founded,our operating companies have spent over $5 billion with minority- and women-owned businesses, and hundreds of millions with veteran-owned businesses. By includingminority businesses in our supply chains, we create jobs andwealth in minority communities. One great example is amulti-year contract we have with a minority-owned businessthat created several hundred new jobs. Since these were entry-level positions, it meant that many of the new employees had access to health insurance for the first time.By including women-owned businesses in our program,we reflect the importance of the women who buy and use our products, and the women physicians who recommend our products. By including U.S. veteran-owned and service disabled veteran-owned small businesses, we can give back to those who have given so much to their country. In 2007,

our supplier diversity program was honored by the Women’sBusiness Enterprise National Council as a “Top Corporationfor Women Businesses” and by the Women Presidents’Educational Organization as “Corporation of the Year.”

One of the supplier diversity challenges we face is main-taining the diversity balance when economic trends towardlow-cost sourcing, supplier rationalization and outsourcingtend to increase the use of publicly held companies. We areaddressing this by continuing to strengthen the supplier development program in place for minority- and women-owned businesses and small businesses; by increasing internaleducation to explain the benefits of supplier diversity toJohnson & Johnson business partners; and by helping to identify new strategies, such as encouraging joint venturesbetween diverse/small suppliers and publicly held suppliers.

There will always be opportunities for us to do more in our external supply chain. �


Q:

BENCHMARKING

Johnson & Johnson and its operatingcompanies use benchmarking — internaland external, formal and informal — toimprove practices and performanceacross geographies, business lines andfunctional units. In 2007, we conductedbenchmarking to help establish our newSafe People goals (see page 27) and to evaluate/improve our sustainabilityreporting. An aspect of external bench-marking that is challenging for us is theuniqueness of Johnson & Johnson —there are no other companies with thesame three business segments. This makesdata comparison with “peers” difficult.We are sometimes able to segment ourown data and identify companies similarto our segments, but transparency in themedical devices industry is fairly limited.

BUSINESS CONTINUITY PLANNING

Each of our operating companies andfacilities have implemented a BusinessContinuity Plan (BCP) to ensure thatemployees, facilities and products remainsafe and secure, and that the ability toserve customers remains uninterrupted.BCP maintains a state of preparedness for disruptive events, natural or man-made.While conceived to address worst-casecatastrophic events, our plans have alsobeen deployed in less severe situations,such as network outages and supply chain disruptions. After each situation, the response is reviewed to see if the BCP can be strengthened.

MOREAbout Our Business Practices

The Johnson & Johnson Policy on Business Conduct governs our business practicesaround the world. Translated into multiple languages, senior managers certify annuallythat their organizations comply with the policy. Key elements covered in the policy areconflict of interest, compliance, antitrust, environmental laws, health care compliance,employment and labor laws, political activities and trade secrets. All of our business policies are available on our website. Other practices are discussed alphabetically below.

CHARITABLE GIVING

Johnson & Johnson and its operatingcompanies give charitable contributions inthe form of cash and non-cash donationsto nonprofit groups and programs aroundthe world. Charitable giving, part of ourCompany’s heritage for more than 100years, is inspired by Our Credo responsi-bility to the communities in which we liveand work, and to the world community.Our primary focus is on making life-changing,long-term differences in human health bytargeting the world’s major health-relatedissues. We work to fulfill this throughcommunity-based partnerships. TheCompany's efforts focus on:

• Saving and improving the lives of women and children

• Building the skills of people who serve community health needs, primarily through education, and

• Preventing diseases and reducing stigma and disability in underserved communities where Johnson & Johnson has a high potential for impact.

To obtain the best insight into the needs of people, we partner with commu-nity-based groups that are experts in theirfields and their communities. Our fundingdecisions are based on a set of guidelinesand objective assessments of where theneed is greatest and where we believe we can do the most good. A global team, including some senior executives in the Corporation, carefully reviews ourcharitable giving programs and projects.Charitable contribution guidelines are

posted on our website. Read moreaboutour charitable giving on pages 34-35.

CONFIDENTIAL HOTLINES

We provide anonymous telephone hotlines for employees to report possibleethical breaches or unlawful acts, withoutfear of reprisal. Each country where weoperate has a single hotline and callersare greeted in their local language. Inaddition to the telephone program, werecently launched a website which allowsusers to anonymously report policy vio-lations through the internet. All reportsare fully investigated and appropriateactions are taken in a timely manner.Compliance with the Policy on BusinessConduct is evaluated as part of ourinternal business audit program and discussed by the Corporate ComplianceCommittee.

COUNTERFEIT PRODUCTS

Johnson & Johnson is working to pro-tect the integrity of its products, and our customers, from counterfeiting. We havetaken various steps to ensure the safetyand well-being of our patients and con-sumers, including the use of state-of-theart anti-counterfeiting technology inproduct packaging; policies that ensurethat wholesalers and distributors of ourproducts obtain them directly from theCompany; and means of product verifi-cation for our customers. Moreover, theCompany utilizes a counterfeit productaction plan in the event it is determined


that a counterfeit product has been iden-tified. Through this plan, the Company’sWorldwide Security department facili-tates a number of actions, including athorough investigation to identify thedistributor(s) and manufacturing site.

GOVERNANCE

There are twelve members of theJohnson & Johnson Board of Directors.Ten of these directors are independentdirectors under the standards of the New York Stock Exchange. The other twodirectors are members of management.CEO William C. Weldon is also theChairman of the Board of Directors. Our Principles of Corporate Governance,available on our website, establishDirector qualifications. Directors meetindependently several times a year, andhave full and open access to all officersand employees of the company. TheBoard of Directors has a standing AuditCommittee, Compensation & BenefitsCommittee and Nominating & CorporateGovernance Committee. Other commit-tees include the Finance Committee,Public Policy Committee and the Scienceand Technology Committee. For moreinformation on these committees andour Board of Directors, see our website.

INTELLECTUAL PROPERTY

The operating companies of Johnson & Johnson rely heavily on the intellectual property protectionsoffered by the U.S. patent system and itscounterpart systems around the world.Patents are critical to maintaining innova-tion in the pharmaceutical and biotech-nology industries. It routinely takes 10years or more, and hundreds of millionsof dollars, to develop, test and obtainapprovals for a single product. Patentprotection weighs heavily on businessplanners when deciding whether to goforward with the investment needed todevelop a potentially promising newdrug. We routinely review hundreds ofpatents during product development,make appropriate design changes toavoid the patents of others and/orobtain appropriate licenses or legalopinions prior to launching our products.Nonetheless, Johnson & Johnson companies do from time to time

become involved in patent litigation,finding themselves defendants about asoften as plaintiffs.

Johnson & Johnson supports apatent system that fairly rewards thosewho contribute to society through theinvention and development of new anduseful products and processes. A fair and reliable patent system stimulates theinvestment in innovation that is necessaryin today’s technologically complex world,enabling the creation of new productsand processes that benefit society.

KNOWLEDGE MANAGEMENT

Sustainable growth for our businessdepends on Johnson & Johnson employ-ees collaborating to find innovations. In2006, we launched a search engine thatlocates internal expertise by brokering a request for assistance to potentiallyperfect responders. LINK (LeveragingInternal Knowledge) works by indexingterms from participant’s outgoing emails.We set an aggressive target to enroll ourentire R&D community in 2007 and wemet that goal.The LINK network is nowover 14,000 employees and more than500 new questions were posted during2007. Successful connections are produc-ing powerful results, such as acceleratingour problem solving capability.

PRICING

The prices we set for our products helpus to cover our research, manufacturing,education and marketing costs. And, they allow us to provide a return to our investors so future investments willenable us to conduct more research andbring new medical advances to people.

In the United States, we work tokeep our net price increases for healthcare products within the Consumer PriceIndex (CPI). A government measurement,the CPI is calculated by gauging pricechanges across a wide array of productsand weighing these changes against thepercentage of income that typical con-sumers spend to purchase these prod-ucts. The result is the “weighted averagecompound growth rate.” From 1996 to2006, the weighted average compoundannual growth rate of Johnson & Johnsonnet price increases for prescription andover-the-counter medicines and hospital

and professional products was below theU.S. CPI.

As the cost of raw materials andother expenses continue to rise, we workto keep our price increases modest andstill maintain competitive profit marginsby producing our products more efficiently,by reducing operating costs, and byimproving our productivity. We also lookfor new ways to design and packageproducts such as baby shampoo andblood glucose monitoring systems sothey meet different needs and enablemore people around the world to affordour products. We are committed toaffordable healthcare, and will continueour efforts to balance the need for afford-able medicines with the costs incurred inbringing new products to market, whileremaining a viable economic enterprise.

PUBLIC POLICY

The mandate of the Public PolicyAdvisory Committee includes oversightand review of: • the Company’s policies, programs

and practices on public health issues regarding the environment and the health and safety of its employees, and,

• the Company’s governmental affairs and policies, both in the United States and internationally, with an emphasis on national health care policies impactingaccess, pricing, regulation and use of medicines and medical devices.

In addition, the Committee reviewspublic policy topics as determined by theCommittee members, such as our initia-tives in the HIV/AIDS area. As part of itsoversight role in governmental affairs and policies, the Committee also annuallyreviews the Company’s political contribu-tion policies and practices.

We also have a comprehensive taskforce comprised of business and technicalleaders which identifies and evaluatesemerging issues that require greaterstudy and understanding. For each keyissue, a subcommittee investigates thenature of the issue, various points ofview and potential business impacts.Among the topics considered to date are pharmaceuticals in the environment,endocrine disrupters, genetically modified organisms and nanotechnology.

23M O R E A B O U T O U R B U S I N E S S P R A C T I C E S

The success of Johnson & Johnson is intertwined with employee satisfaction and well-being. Employees are more determined, innovative and passionate when they feel valued. We have a responsibility to respect employees, recognize merit, compensatefairly, assure equal opportunity and provide safe and healthy workplaces. We have anumber of policies supporting these obligations; they can be found on our website.Here we discuss a number of our workplace practices, presented in alphabetical order.

MOREAbout Our Workplace Practices

ADVANCEMENT OF WOMEN

The mission of the Women’s LeadershipInitiative (WLI) at the Johnson & JohnsonFamily of Companies is to support theleadership development initiatives ofJohnson & Johnson with strategies andactions focused on increasing the num-ber of women in leadership positionsand developing women’s leadershipcompetencies. WLI also works to fosterinclusive organizational environmentsand increase recognition that diverseleadership will enhance the effectivenessand business success of our companies.Launched in 1995, WLI now has 47 chap-ters worldwide and has helped make us the employer of choice for talentedwomen in the health care industry.

AFFINITY GROUPS

Affinity groups are voluntary, employee-driven associations organized aroundshared interests or characteristics. These groups allow individuals to share experiences, provide advice and addressunique member concerns. As they havegrown, affinity groups have becomemore prominent and involved in initia-tives that go beyond simply serving theirmembership. They now play an integralrole in advancing diversity and inclusionthroughout our Family of Companies.Affinity groups also provide valuableinsight into market opportunities withinthe groups they represent.

COLLECTIVE BARGAINING/FREEDOM OF ASSOCIATION

To ensure that each of our operatingcompanies follows consistent principlesrelative to labor and employment prac-tices, a set of global guidelines detail our positions relative to associations andlabor unions. We respect each employ-ee’s right to decide if they want to joinassociations and/or labor unions, and to make an informed decision, free of coercion. An individual’s support of, oropposition to, these associations doesnot impact their employment or applica-tion for employment. Employees havethe right to organize, join associationsand bargain collectively, if they sochoose. Our companies will bargain ingood faith with these associations.

DIVERSITY

Johnson & Johnson’s Global Office ofDiversity and Inclusion advocates andfosters diverse and inclusive work environments throughout the Family of Companies. In 2007, a new GlobalDiversity and Inclusion Vision that rein-forced our culture of collaboration wasreleased (see our website). Diversity andinclusion are ingrained in our approachto our workforces, marketplaces andexternal stakeholders. Rather than seeingdiversity as a response to demographicchanges, we see it as a tremendousopportunity that we must continually and proactively pursue. We do this by

promoting an environment whereemployees can freely learn about diversity; offering compelling evidence toshow that leveraging diversity providestangible benefits for our companies; and fostering a workplace where individualswith diverse perspectives and skills cancollaborate and thereby maximize boththeir individual and collective potential.

EMPLOYEE ASSISTANCE

Since 1978, when Johnson & Johnsonlaunched its first Employee Assistanceprogram (EAP), we have understood that employees’ personal challenges are inextricably linked to their work lives. Issues related to relationships, child rearing, substance abuse, or othersources of stress can have an impact onthe health, happiness, and quality of lifeof our employees and their families. OurEAPs are designed to give our employ-ees access to counseling, assessment,intervention, and training. To ensure thatall employees interested in reaching outto our EAPs feel comfortable doing so,services can be accessed electronically,by phone, by visiting an onsite EAP counselor or representative, or by contacting an offsite service. Currently,these services are provided to 88 percentof our work force, up from 75 percent in2006, and 30 percent in 2005.


EMPLOYEE FEEDBACK

Johnson & Johnson conducts a biannualCredo survey that gives employees anopportunity to evaluate and challengethe Company’s performance against itsvalues and beliefs. Until 2007, the surveywas given annually. We have changed toa biannual schedule to enable time forthe results of implemented changes tobe seen. In the past four years the aver-age global response rate has been a high 92 percent — reflecting the employ-ee comfort that the survey is accessible,confidential, and that leadership truly listens to employee feedback. Actionplans to improve employee satisfactionare customized and implemented verylocally (for example, by department oroperating company), but senior leader-ship also looks at broad trends across the organization. Employee engagementcontinues to be our biggest challenge.We observe a high correlation betweenemployee engagement and our employees’feeling valued.

ERGONOMIC INJURIES

Johnson & Johnson recognizedergonomic factors as an employee safety hazard in the late 1970’s. In 1995, ergonomic injuries accounted for48 percent of our lost workday cases. At the end of 2007, ergonomic injurieswere just 33 percent of our lost workday

cases. This is a remarkableimprovementwhen one con-siders that wehave made over-all reductions inlost workdaysduring this sameperiod. The proliferation ofcomputers hasalso increased

The company vehicle serves as a workplacefor the majority of these employees,some of whomspend as muchas 60 percent of their workingtime driving for companybusiness.

We are proud of the fact that our rate of accidents per million miles driven(APMM) has decreased 39 percent since1995. Our 2007 APMM was 5.30.

Benchmarking conducted in 2007showed that we ranked sixth for 2006APMM against 24 other multi-nationalsand first when compared to 13 otherpharmaceutical companies. While thisranking is very good, it still representsover 3,000 vehicle accidents a year, eachof which has the potential to cause seri-ous injury or death. For this reason, we continue a strong investment in our fleetsafety program. Our accident preventionapproaches include gaining the supportof senior managers in our sales organiza-tions, driver training, and incorporatingfleet safety into personal performanceobjectives. Because driving is hazardousboth on and off the job, we also try toheighten awareness among our non-fleetdrivers and their families.

In 2007, Johnson & Johnson was one of only a few companies invited by the World Health Organization to participate in the United Nations RoadSafety Collaboration. The UNRSC builds global awareness around the need for better road safety.

FLEXIBLE WORK ARRANGEMENTS

Johnson & Johnson has offered flexiblework arrangements throughout theCompany for many years. In 2006, we

the opportunity for ergonomic injury and many of our manufacturing processestoday still require repetitive motion, lifting and other movements that cancause ergonomic injuries.

Our success has come from internal-ly-developed risk analysis tools and a cultural approach wherein ergonomics is integrated into core business values. The Johnson & Johnson ergonomicsapproach is standardized and consistentacross the Company. Our operating companies have evaluated all manufac-turing tasks and classified them as high,moderate or low risk. We then adoptedan aggressive strategy to eliminate ormodify the high risk tasks. This work continues today. Further improvementvia engineering solutions is our challenge;in some cases, technical solutions are notcurrently feasible. Where this is the case,we continue to apply other administrativecontrols and watch for new technologies.

EQUAL EMPLOYMENT OPPORTUNITY

Johnson & Johnson has an EqualOpportunity Employment Policy whichstrictly prohibits discrimination againstany employee or applicant for employ-ment because of the individual’s race,color, religion, gender, sexual orientation,gender identity or expression, nationalorigin, age, disability, veteran’s status, orany other characteristic protected by law. Affirmative action is taken to ensure that all employment decisions, including but not limited to those involving recruitment, hiring, promotion, training,compensation, benefits, transfer, discipline, and discharge, are free fromunlawful discrimination.

FLEET SAFETY

SAFE Fleet, the Johnson & Johnson fleet safety program, is more than ten years old and currently provides services to more than 35,000 employees.

We have a responsibility to respect

employees, recognize merit, compensate

fairly, assure equal opportunity and

provide safe and healthy workplaces.

25M O R E A B O U T O U R W O R K P L A C E P R A C T I C E S

Ergonomic Injuries % of lost workday cases

48

21

2833

95 05 06 07

Fleet Car Accidents Per million miles driven

8.76

4.865.32 5.30

95 05 06 07

surveyed 4,400 Johnson & Johnsonemployees in the U.S. to understand thevalue proposition for flexibility. We foundthat 65 percent of respondents whojoined the Company in the previous threeyears said flexibility was important in theirdecision to take the job and 78 percentof respondents said flexibility is an impor-tant aspect when considering whether tostay with the Company. In 2007, seniormanagement committed to increasingopportunities for flexibility in recognitionthat the sustainability of our businessdepends on our ability to attract andretain talented employees. Flexiblearrangements include telecommuting,flextime hours, remote work, occasionalflexibility, a compressed work week,summer hours and part-time work or job sharing.

HEALTH MANAGEMENT

We have a long-standing commitment to improve and sustain the health of ourworkforce. Our Global Health Servicesgroup works to optimize medical servicesand the health and productivity ofemployees worldwide through employeeassistance, occupational health programs,health promotion and wellness services.Our efforts in these areas have expandedglobally over the past several years withthe goal of creating a “global culture of health”. Planning and programmingare customized by country, region andoperating company, based on differenthealth care systems, disease states, culturally specific behaviors and accessi-bility to services. This allows us to expandservices while being mindful of varyingcultural and business needs worldwide.We have three strategic objectives for employee health — sustain a global culture of health, reduce employeehealth risk factors, and ensure regulatorycompliance. Senior executives review the strategy and performance annually.


HIV/AIDS WORKPLACE INITIATIVE

The goal of our Worldwide HIV/AIDSPolicy, introduced in 2005, is to ensurethat all of our employees have access toHIV/AIDS treatment and support services.The policy provides for non-discrimina-tion and confidentiality protection foremployees living with HIV/AIDS; voluntarycounseling and testing programs; care,support and treatment for employees and their dependents with HIV/AIDS; and prevention, education, and awarenessprograms for all employees of theJohnson & Johnson Family of Companiesand their dependents. At the end of 2007,elements of this policy had been imple-mented at 98 percent of our U.S. andPuerto Rico sites, and 81 percent globally.

New Global Health 2012 goals have been created for health and wellnessservice offerings, voluntary health profiles,employee health risk level, and on-timecompletion of medical surveillance.

GOALS (by 2008)

Increase employee voluntary use of thehealth profile in the U.S.

• A C T U A L85% of employees participated, an 18% increase

65% of U.S. employees who participatein voluntary health screening profile arein low risk category

• A C T U A L

77% of U.S. employees are in the low risk category

HEALTH GOALS AND PERFORMANCE

For many years, we have used a volun-tary employee health profile to give usan indication of employee health and the impact of our health programs. The profile is a confidential questionnaire thatidentifies health and lifestyle risks includingtobacco use, blood pressure, cholesteroland inactivity. We have made goodprogress reducing tobacco use and lowering blood pressure and cholesterol,but employee inactivity continues to be a challenge (see the Data Summary Table on page 40). We estimate that our attention to these areas has avoided$15.9 million in health care costs. During2007, additional health targets were successfully achieved:

GOALS (by 2012)

100% of sites offer 13 health & wellnessservices

• A C T U A L94% of worldwide sites are offeringa minimum of 4 services. 50% ofU.S. sites are offering all 13 services.

70% of employees who participate in voluntary health screening profile are in low risk category

• A C T U A L78% of participating employees are in the low risk category

Increase access to and use of the health profile

• A C T U A L47% of non-U.S. locations haveaccess to profile. Pilots conducted in 7 countries, 23 locations

≥93% of periodic medical surveillance completed on time.

• A C T U A LProcess to measure goal established


SAFETY MANAGEMENT

Employee health and safety are amongour highest values. Johnson & Johnsonaspires to be among the leaders inhealth and safety by achieving healthylifestyles and injury-free workplaces.Leadership is characterized by elimina-tion of injuries and illnesses, global bestpractice sharing, influence in the regulatoryenvironment, and delivered businessresults. Corporate standards and astrong internal management system areaudited by impartial teams from outsidethe audited facilities and safety perform-ance is discussed annually with the PublicPolicy Advisory Committee of the Boardof Directors. Our programs are deployed by several hundred safety and industrialhygiene professionals throughout ouroperating companies, but we owe ourstrong performance to the engagementand commitment of employees at all levels. Key challenges include improvingthe safety performance of new acquisi-tions, bringing renewed emphasis oncontractor safety, and influencing thehealth and safety practices of our external manufacturers.

SAFETY PARTNERSHIPS

Johnson & Johnson partners with a numberof external organizations to promotehealth and safety in our workplaces andour communities. Three partnershipswere of particular note in 2007 — the U.S. Occupational Safety and HealthAdministration (OSHA), the U.S. NationalSafety Council (NSC) and the JointUS/EU Conference on Health & Safety AtWork. At the end of 2007, we concludedour second partnership with OSHA onergonomics. In 2008, we anticipateentering into OSHA’s Alliance Programwith a focus on ergonomics, fleet safetyand prevention through design. Alliancepartners leverage OSHA’s resources andexpertise to share and promote work-place health and safety information withother companies.

The NSC is dedicated toprotecting life and promoting health.

Johnson & Johnson serves on the NSC Board of Delegates and we areworking with the organization to pro-mote the business case for safety andhealth. This effort follows our receipt ofthe NSC Campbell Award in 2005. TheJohnson & Johnson business case will be available in 2008.

Finally, we were one of only 14 companies invited to participate in theJoint US/EU Conference on Health &Safety At Work. The conference was convened to share insights about different approaches to eliminating hazards in the workplace.

TALENT MANAGEMENT AND TRAINING

Johnson & Johnson companies encour-age employees at all levels to continuallydevelop their career and leadershipskills. To supplement on-the-job devel-opment, we provide extensive, globallyaccessible training and development.Offerings span individual, team, organi-zation and leadership developmentthrough options such as e-learning, traditional classroom training and blended learning.

TOBACCO-FREE POLICY

In 2007 we implemented a WorldwideTobacco-Free Work Place Policy that prohibits tobacco at all company locations, including buildings, property,leased buildings, company vehicles and company-sponsored meetings. For approximately 18 months prior to this change, we offered employees and their dependents a variety of smoking cessation programs, includingcounseling, medications, on-line programs, group meetings and individual coaching — all at no cost (in the United States). Globally, weachieved 98 percent compliance withthis policy in 2007.


27M O R E A B O U T O U R W O R K P L A C E P R A C T I C E S

Serious Injury/Illness Rate Incidents per 100 employees

0.07

0.03 0.03

0.02

95 05 06 07

Lost Workday Case Rate Incidents per 100 employees0.31

0.06 0.07 0.08

95 05 06 07

RESILIENCY TRAINING

Employee Assistance Programs are bothreactive and pro-active. Johnson & Johnson'soperating companies are now offeringservices to help employees learn to managestress before it manifests in physical oremotional illness. Resiliency training gives employees stress management skillsand provides techniques that increasepersonal ability to quickly bounce backfrom the ups and downs of life. In 2007,approximately 15 percent of our globalworkforce participated in this training.

SAFE PEOPLE GOALS AND PERFORMANCE

Johnson & Johnson has long had annual goals to continuously improvesafety performance at its facilities. In2007, an internal team transformed the year-on-year safety goal and target setting process into a longer-term enter-prise-wide set of safety goals called SafePeople 2010. To help select targets, webenchmarked our current performancewith two different industry groups. Our safety indicators are alreadyamongst those of the leaders and, while we still have an aspiration for zeroinjuries/illnesses, we were able to set targets for lost workday and seriousinjury/illness cases, fleet accidents, compliance, action planning and safetyculture. In addition, we expanded ourmetrics to include safety at our externalmanufacturers. Our performance is summarized below, and it comparesfavorably to industry benchmarks.

“The environment is the ultimate human health issue.” As the world’s largest health care company, Johnson & Johnson recognizes the critical interdependence betweenhuman health and the health of our planet. As a multi-national organization, our environmental impacts are far-reaching. We maintain an Environmental Policy and corporate standards (see our website) that guide our operating companies.

We are committed to environmental excellence, instilling environmental awareness in our employees, utilizing good environmental practices in our products and processes and contributing to global sustainable development. Highlights ofour environmental programs and performance against our Healthy Planet 2010 goals follow, in alphabetical order by topic.

MOREAbout Our Environmental Practices

ACCOUNTABILITY

In keeping with our decentralized organi-zation, primary accountability for environ-mental rests with each franchise GroupOperating Committee. Environmentalperformance across the enterprise is sup-ported by Company senior managementand discussed, along with complianceand emerging environmental issues,annually with the Public Policy AdvisoryCommittee of the Board of Directors.

AWARENESS

We have a Healthy Planet 2010 goal toconduct annual environmental literacycampaigns throughout our operatingcompanies. We believe increased knowledge about global environmental challenges inspires our employees tomake choices and take actions that aregood for the environment. This benefitsJohnson & Johnson. We have beenimplementing environmental improve-ment projects for over 15 years. As such,the ‘easy’ opportunities to reduce ourimpacts are long gone. We need theengagement and ideas of all of ouremployees to suggest workable, newimprovements. During 2007, 92 percentof our facilities deployed a literacy cam-paign. More than 60 percent focused on

climate change. Educational materialsand approaches included posters, web-conferencing, newsletter articles, e-learn-ing modules, brochures, an email fromour CEO and some materials specifically created for the children of our employees.

BIODIVERSITY

We have a goal to enhance biodiversityconservation in areas over which we havecontrol or influence. Through the devel-opment and implementation of writtenbiodiversity conservation plans, our operating companies are taking multipleapproaches to meet the spirit of this commitment. As of the end of 2007,approximately 95 percent of our operat-ing companies have a biodiversity planthat is endorsed by leadership. More than50 conservation projects are underwayaround the world; 55 percent of theseprojects are to improve the biodiversityon our own work campuses; the remainderare offsite projects. Many of our operatingcompanies have joined together withexternal partners, governmental or non-governmental organizations, to conserve or enhance biodiversity.Projects include environmental cleanups,reforestation, protection of endangeredspecies, aquifer protection, and habitatrestoration.

In the Asia-Pacific region, a numberof our companies joined together tobecome part of widespread efforts toreforest the Inner Mongolia desert. Yearsof overgrazing in the region have fueledmassive, damaging dust storms that nowblow across China.

COMPLIANCE AND ASSURANCE

Regulatory compliance is the minimumexpectation for Johnson & Johnson oper-ating facilities. We monitor compliancethrough an assessment program that hasfour elements: annual self-assessment,third-party joint assessment on a risk-based interval, action planning, and corrective action tracking. Managementaction plans are reviewed by senior


AccidentalReleases Number of events

9 9 9*

05 06 07

*Two were spills of diesel oil to soil, totalling 8,000 liters; three were releases to air totalling 1,050 kilograms of refrigerants and 350 kilograms of volatile organic compounds. The remaining were minor releases to the sanitary sewer.

business leaders and significant compli-ance risks and events are presented and discussed at Corporate ComplianceCommittee meetings.

CONSERVATION PARTNERSHIPS

In addition to the external, more localpartnerships forged by our operatingcompanies, Johnson & Johnson supportsa number of major environmental organ-izations. To name a few, we are a long-standing supporter of the World WildlifeFund, The Conservation Fund, the Trustfor Public Land, The Wilderness Societyand the Harvard Medical School Centerfor Health and the Global Environment.

Since 2003, we have supported inno-vative “Healthy Communities, HealthyEcosystems” projects around the worldwith the World Wildlife Fund. We partic-ularly identify and support projects that

29M O R E A B O U T O U R E N V I R O N M E N TA L P R A C T I C E S

make the connection between environ-mental protection and community health.

The Harvard Center advances environ-mental education at medical schools topromote research and awareness of theimpact of global environmental changeon human health. A particular project we supported will culminate in 2008 withthe highly anticipated publication of acomprehensive book that highlights howhuman health depends on continued biodiversity. Sustaining Life: How HumanHealth Depends on Biodiversity is expect-ed to be used as a textbook for collegeecology and environmental science courses, as a resource for environmentalgroups working on conservation, and asa key reference for policymakers.

ENVIRONMENTAL MANAGEMENT SYSTEM CERTIFICATION................

Each facility is required to characterizeand understand its impacts, plan foremergencies and seek opportunities for continuous improvement. At the endof 2007, 100 percent of our operating and research & development facilitieswere third-party certified to the ISO14001 environmental management system standard.

FLEET EMISSIONS

The Company’s worldwide automobilefleet consists of approximately 35,000owned or leased vehicles used by oursales and management staff. The opera-tion of these vehicles accounts for an estimated 250,000 metric tons of CO2

emissions from approximately 775 millionmiles driven in 2007. At present, we donot include fleet emissions in our report-ing of worldwide CO2 emissions becausewe do not have the same degree of precision in this measurement. Ongoingefforts are in place to improve our tracking of the CO2 emissions generatedby our fleet.

Our Healthy Planet 2010 goal is toreduce total CO2 emissions per kilometerdriven by 30 percent against a 2003baseline. Using U.S. based data, thistranslates into 150 grams CO2 per kilometer (approximately 36.4 miles pergallon of gasoline). To realize this objec-tive, we have established minimum fuelefficiency requirements (by vehicle cate-gory) for the purchase of fleet vehicles. In addition, we are actively incorporat-ing hybrid electric cars and ethanol-fueled vehicles in the fleet. As of March2008, the U.S. fleet had 978 hybrids onthe road and 508 more on order. Ourtarget is to have 1,600 hybrids on theroad by the end of 2008.

In 2007, our average U.S. fleet emis-sions per distance driven was 218 gramsCO2 per kilometer (25 mpg), which isabove our 2003 baseline of 214 gramsCO2 per kilometer (25.5 mpg). We have seen an improved awareness andincrease in market demand for moreenvironmentally friendly vehicles over the past year and we are actively align-ing our vehicle purchasing strategy withthose models as they become available.

FOREST PRODUCTS PURCHASING

In 2006, the Company issued new Forest Products Purchasing Guidelines(available on www.jnj.com) that assist ourprocurement professionals with makingforest products purchasing decisionsthat are consistent with our environmen-tal goals. The guidelines include under-standing the source of purchased forestproducts and verifying the legality ofhigh-risk sources. As a large, multinationalbusiness, we know Johnson & Johnsonand its operating companies are posi-tioned to make paper and packagingprocurement decisions that could helpinfluence responsible forest management.We are a member of the North AmericaForest & Trade Network (NAFTN) and theGlobal Forest & Trade Network (GFTN).

We have a Healthy Planet 2010 goal to conduct annual environmental literacy

campaigns throughout our operating companies because we believe increased

knowledge about global environmental challenges inspires our employees

to make choices and take actions that are good for the environment.

Fines PaidThousands $U.S.

5.82 5.58

31.4*

05 06 07

*Represents four fines. The largest, a $26,710 air permit violation, resulted from interruption of a continuous monitoring system.

Agency-IdentifiedNoncompliances Number of events

18

1013*

05 06 07

*These include findings from routine inspections and reporting. All of the issues were minor in nature.


These organizations helped us under-stand current threats to our forests andthe varying ways we can protect them.

Under Healthy Planet 2010, we haveset goals for 90 percent of our officepaper and 75 percent of our paper-basedpackaging to contain greater than 30 percent post-consumer recycled content or contain fiber from certifiedforests by 2010. These targets were setafter careful consideration of industrybenchmarks, our 2005 baseline data and the opportunities for improvementin our current supply chain. Our 2007 results are summarized below:

GOALS, HEALTHY PLANET 2010

Enterprise-wide environmental goals areestablished every five years. In 2005, we initiated our newest set of goals, theHealthy Planet 2010 Goals. These weredeveloped using a stakeholder engage-ment process that included governmen-tal representatives, non-governmentalorganizations, other companies, academicinstitutions and our employees at all levels. Goals have been set for biodiversity,compliance, energy use (carbondioxide reduction), environmental literacy, external manufacturing, paperand packaging, product stewardship,transparency, waste reduction and water

use. Each of these goals is discussed undertheir individual headings in this report.

OZONE DEPLETING SUBSTANCES

Johnson & Johnson has previously committed to comply with the “MontrealProtocol on Substances that Deplete theOzone Layer.”Our operating companiescompleted the accelerated elimination of halons in fire suppression systems and the use of chlorofluorocarbons (CFCs) in HVAC/refrigeration equipment.In September 2007, representatives of 191 countries met in Montreal and agreed to accelerate the phase-out ofhydrochlorofluorocarbons (HCFCs) withdeveloped countries agreeing to reduceproduction and consumption 10 yearsearlier than previously promised, with final phase-out in 2020. Europe is accel-erating this schedule by implementing a complete HCFC phase-out by 2015.Johnson & Johnson has committed to the accelerated removal of HCFCs by2015 from HVAC/refrigeration equipmentgreater than 5 tons in cooling capacity.We have plans to incorporate availablealternatives and ensure no new CFC- orHCFC-containing equipment is purchased.

PACKAGING

Johnson & Johnson has been minimizingpackaging use for more than 10 years. We have made strides to reduce the size of our packaging, the weight of our packaging and the recyclability of ourpackaging. We have also considered howour choice of packaging material affects

the environment. There will always be abalance between the environmental con-cerns about packaging and the concurrentneeds for product safety and productinformation. At Johnson & Johnson, ourfirst responsibility is to the doctors, nurses,and patients who use our products. In meeting their needs, everything we do must be of high quality. But, anever-increasing number of our customersare making product choices based on less packaging and the recyclability ofthat packaging.

In 2005, our Consumer Group ofCompanies created a global strategicdesign office, reporting directly to theWorldwide Group Chairman, to incorpo-rate environmental sustainability andinnovative design throughout greatConsumer brands like JOHNSON’S®, BAND-AID® and NEUTROGENA®. An internaldecision-making tool was created toguide responsible packaging design andthe purchase of packaging materials. It is applied during new product launches,repackaging projects, line extensions andsampling programs. Our over-archingvision is to minimize the environmentalimpacts of our packaging while still maintaining functional, aesthetic andquality attributes for our consumers. We see sustainable packaging as a journey with many different considera-tions, pathways and incremental changes.

A few of the specific accomplishmentsfrom the Consumer Group in 2007 wereincorporating post-consumer high-densi-ty polyethylene recycled content into theSOOTHING NATURALS™, Oatmeal Vanilla,and JOHNSON’S® BEDTIME™ Toddler Wash


Paper Packaging

percent of packaging that contains >30% post-consumer recycled content or contains fiber from certified forests

Goal (by 2010) 75%

2007 Actual 93%

Off ice Paper

percent of office paper that contains>30% post-consumer recycled content or contains fiber from certified forests

Goal (by 2010) 90%

2007 Actual 83%

Enterprise-wide

environmental goals are

established every

five years. In 2005,

we initiated our newest

set of goals, the Healthy

Planet 2010 Goals.


bottles and switching from non-certifiedpaper board in our BAND-AID® packagingto board from Brazil that is now 100% FSC-certified (Forest StewardshipCouncil).

Under our Healthy Planet 2010 goals, we have specific Company-widetargets for paper-based packaging andPVC packaging. (See Forest ProductsPurchasing and Polyvinyl Chloride)

PHARMACEUTICALS IN THE ENVIRONMENT

Trace quantities of ingredients found inpharmaceuticals have been detected in water systems in the U.S. and Europe.These compounds reach the environ-ment primarily from normal patient and consumer use as they pass through thebody and into sewer and wastewatertreatment systems.

There is concern that these trace levelsmight present a risk to human health oraquatic organisms. A substantial body ofpeer-reviewed research studies suggestsit is unlikely that these quantities affecthuman health. Scientists have found no evidence of adverse human healtheffects from trace levels of pharmaceuticalsin the environment (PIE). While the science is evolving, most studies havefound that these compounds do notpresent a significant risk to aquaticorganisms at concentrations typicallyfound in the environment. However,some studies have shown that certainendocrine-active chemicals do affect some aquatic species after long-term exposure. Additional researchis needed to properly evaluate the potential impacts on aquatic life.

Johnson & Johnson fully supports further scientific study to better under-stand the impact of trace amounts ofpharmaceutical and other compoundson the environment. We are activelyengaged on this issue both on our own and in cooperation with academia,industry and government.

In 2002, Johnson & Johnson formed a task force to assess the significance ofendocrine-active materials and PIE. It is

a challenging issue due to its complexity:

• sources of PIE are geographically wide-spread;

• pharmaceuticals may exist in their original chemistry or as metabolites;

• the environment already contains natural estrogens; and,

• the science to assess the risks of drug mixtures is still developing.

Johnson & Johnson is working onthese challenges in cooperation with academic institutions and other organiza-tions such as, PhRMA (PharmaceuticalResearch and Manufacturers of America),European Federation of PharmaceuticalIndustries and Associations, Society ofEnvironmental Toxicology and Chemistryand European Centre for Ecotoxicologyand Toxicology of Chemicals. ThroughPhRMA, we have opened a dialogue with the U.S. Environmental ProtectionAgency and U.S. Food and DrugAssociation to address PIE concerns.

Although the vast majority of pharma-ceutical and other compounds found inwater systems arises from normal patientand consumer use, Johnson & Johnsonoperating companies are taking steps to evaluate and minimize or eliminatethese compounds from their wastewater.Periodic wastewater monitoring has been used to determine potential toxicity to aquatic organisms, to conduct riskassessments, and to develop safe levels(Predicted No Effect Concentrations orPNECs) for our active pharmaceuticalingredients (APIs). At the end of 2007,most of our global pharmaceutical manu-facturing facilities producing APIs hadcharacterized their wastewater effluent.This information will be used to explorerisk management options to reduce riskwhere appropriate.

Another way pharmaceutical com-pounds can reach the environment isthrough consumer disposal of unused orexpired medicines. Johnson & Johnsonsupports the U.S. White House Office of National Drug Control Policy for the Proper Disposal of PrescriptionPharmaceuticals. This policy suggests acombination of take-back programs when


they are available, trash disposal for mostmedicines, and flushing for some specificpharmaceuticals, such as narcotics.

Johnson & Johnson is also participat-ing in an educational effort, calledSMARxT Disposal, being led by PhRMA,the U.S. Fish & Wildlife Service and theAmerican Pharmacists Association toinform consumers about proper disposalof unused or expired medicines.

POLYVINYL CHLORIDE (PVC) PACKAGING

Polyvinyl chloride (PVC) has long beenused in packaging for drugs, medicaldevices and personal care productsbecause of its desirable physical charac-teristics for protecting product quality,including impermeability to moisture, gas and flavor. But Johnson & Johnsonoperating companies also understandconcerns about the ability to dispose ofPVC in an environmentally sound mannerand the difficulties with recycling PVC.Our Consumer franchise had a goal for100 percent removal of PVC in primarypackaging by the end of 2007.Primary packaging is that which hasdirect contact with our products.

Although not apparent from this datarepresentation, the franchise eliminatednearly all primary PVC that was in ‘legacy’consumer products (those products inthe sector prior to the acquisition ofPfizer Consumer Healthcare) by the endof 2007. The bulk of the remaining primary PVC is from Pfizer ConsumerHealthcare (PCH) and we anticipate fullelimination during 2008.

Additionally, we had a goal for 100percent removal of PVC in our secondaryand tertiary packaging throughout theCompany, by the end of 2007. An example

1º PVC Packaging – Consumer Franchise

Million kilograms usedGoal (by 2010) 02005 2.592006 3.202007* 2.78*Includes former Pfizer ConsumerHealthcare PVC.


of secondary packaging would be theplastic safety seal placed around a bottlecap. Tertiary packaging would includeouter containers such as needed for palletizing and shipping.

We have eliminated 84 percent of oursecondary and tertiary PVC packagingacross the Company. Again, current usesof secondary and tertiary PVC are largelyattributable to the former PCH products.

PRODUCT STEWARDSHIP

At Johnson & Johnson, our operatingcompanies strive to review all new products, processes and packaging forenvironmental impacts using our internalDesign for Environment tool. Increasingly,stakeholders are interested not only inwhat comes out of our facilities, but alsowhat goes in. Evaluating a product’s lifecycle enables developers to identify and reduce environmental impacts introduced by raw material selection,product use and product disposal. Inmany countries, legislation is emergingto restrict the use of certain potentiallyharmful substances.

We have a Healthy Planet 2010 goalthat challenges each of our franchises to

continuously improve their product andprocess environmental profiles. At theend of 2007, 90 percent of our franchiseshad such a plan. Our Consumer Group of Companies has a number of productingredient strategies; in Medical Devices &Diagnostics, product improvementsinclude eliminating heavy metals, PVCand solvents; and the PharmaceuticalGroup has implemented green chemistry strategies. Johnson & Johnson also participates in the Product SustainabilityRoundtable (PSRT), an organization that benchmarks product sustainabilityprograms and keeps abreast of emergingbest practices.

Our operating companies with electronic products are also committedto implement an electronics take-back program in 100 percent of their regions,with a plan to recycle or remanufacturethem to the extent possible. As of the endof 2007, they had achieved 21 percentcoverage. In addition, the weight ofproducts taken back increased by 6.7 percent when compared to 2006, and by more than 1,500-fold when compared to the baseline year, 2005.

TRANSPARENCY

Johnson & Johnson has worked toincrease its transparency since 1993,when we published our first corporateenvironmental report. Since then, we have steadily increased the informationavailable to the public about our environ-ment, health and safety performance and expanded our reporting to includethe full range of sustainability topics


2º and 3º PVC Packaging – Worldwide

Million kilograms usedGoal (by 2010) 02005 1.542006 0.202007* 0.24*Includes former Pfizer ConsumerHealthcare PVC.

in 2003. In 2006, we began a HealthyPlanet 2010 commitment to have 100percent of our manufacturing and R&Dfacilities providing facility- or company-specific environmental sustainability information. While guidance about thetypes of information has been provided,facilities customize their informationbased on local community and stakeholderinterests. At the end of 2007, 66 percentof our facilities had a transparency reportposted to our website.

We have been honored

as a Green Power Partner

of the Year in 2003, 2005,

2006, and 2007 and we

received a Green Power

Leadership Award

in 2002 and 2004.

We participate in this

program because we

believe that our

investment in green

power helps support the

development of renewable

generation capacity in

the U.S. while protecting

the environment.

goals to reduce its environmental impacts.In addition, Johnson and Johnson wasinvited to become one of the first, and to date, one of only five companies to gain recognition as a Corporate Leader,which includes committing to additionalCorporate-wide targets. More informa-tion on Johnson & Johnson’s involvementwith this partnership, and the improve-ment targets we have set, can be foundat www.epa.gov/performancetrack.

WASTE LIABILITIES

Johnson & Johnson has been named a potentially responsible party for 26 hazardous waste sites, and we haveaccrued approximately $7.1 million inenvironmental liabilities. Our involve-ment in these sites is the result of eitherpast waste management practices thatwere standard industry practice at thetime, or of improper handling of ourwastes by companies with which we contracted. During 2007, we expendedapproximately $5 million to addressremediation issues at 23 existing anddivested properties. To date, we havefiled for closure at three sites. We haveapproximately $44.9 million in reservesset aside for all future cleanups.

WASTE REDUCTION

By eliminating or reducing waste, we not only decrease our environmentalimpact, we also reduce the associatedcosts and risks/liabilities from transporta-tion, treatment and disposal. We set aHealthy Planet 2010 goal to reduce ourhazardous and non-hazardous waste by10 percent against our 2005 baseline levels. Since 2005, our operating companies have achieved a 10 percentreduction in non-hazardous waste, largely through increased recycling andreuse of their waste and some innovativecomposting projects. Similarly, increasedrecycling and reuse of waste haveallowed us to achieve a four percentreduction in hazardous waste since 2005.

VOLUNTARY PARTNERSHIPS

Johnson & Johnson believes partnershipsare an effective way to achieve commongoals, help shape public policy and setan example for other companies. Wehave a history of being among the firstcompanies to participate in voluntaryprograms from the U.S. EnvironmentalProtection Agency (EPA). For example,we participated in EPA’s first voluntaryprogram, the 33/50 Program, which targeted emission reductions for prioritychemicals. It was the Agency’s hope thatthe voluntary program would bringabout targeted reductions more quicklythan would regulations alone. In fact, the program achieved its goal one yearahead of schedule. Today, our partner-ships with the EPA include the SmartWayProgram (see discussion on page 20),the Green Power Partnership, ClimateLeaders, and the National EnvironmentalPerformance Track Program (PT).

The Green Power Partnership encour-ages organizations to buy green power as a way to reduce the environmentalimpacts associated with purchased electricity use. Johnson & Johnson is afounding Green Power Partner and anongoing member of the Green PowerLeadership Club. We have been honoredas a Green Power Partner of the Year in 2003, 2005, 2006, and 2007 and wereceived a Green Power LeadershipAward in 2002 and 2004. We participatein this program because we believe thatour investment in green power helpssupport the development of renewablegeneration capacity in the U.S. whileprotecting the environment. It is also agood business decision, providing theCompany with a reliable and stable supplyof energy. (See page 16 for a more thoroughdiscussion of our energy commitment.)

The Performance Track program recognizes and drives environmentalexcellence by encouraging facilities with strong environmental records to goabove and beyond their legal require-ments. Each participating facility (thereare 38 in the program from our Family ofCompanies) sets four public, measurable


05 06 07

Hazardous Waste Million kg

35.238.9

33.8

05 06 07

60.057.2

54.0

Non-hazardous Waste Million kg

Figures reflect the acquisition ofPfizer ConsumerHealthcare and the correspondingadjustment of the2005 baseline. They also includesmall corrections as a result of routineauditing of our data.

05 06 07

Water Use Million m3

12.5 13.011.8

Figures reflect the acquisition of Pfizer ConsumerHealthcare and the corresponding adjustment ofthe 2005 baseline. They also include small correc-tions as a result of routine auditing of our data.

WATER USE

Diminishing water supplies and decreasingwater quality are pressing environmentalchallenges, as evidenced by the watershortages observed in many parts of the world this past year. As competingdemands for water continue to grow,this problem is likely to become moreacute. At Johnson & Johnson, we have been reducing our water use formany years. We realized a 16 percent absolute reduction in our water use from 2000 – 2005, at a time when salesincreased 56 percent. To ensure that wecontinue to identify and maximize ourwater conservation, we set a HealthyPlanet 2010 goal for a further 10 percentabsolute reduction in water use from2005 – 2010. As of the end of 2007, we achieved a six percent reduction.


The greatest gifts a company can give to its community are its time, talents andresources to make long-term, meaningful difference in people’s lives. This is especiallyso for a health care company like Johnson & Johnson, which has the ability to address,through community engagement, the world’s major health-related issues. The Companyworks together with key community-based partners that have the greatest insight intothe needs of local populations and the strategies that stand the greatest chances ofsuccess. Over the years, Johnson & Johnson has continued to grow and learn from itsphilanthropic partners the best ways to address the needs of communities throughoutthe world. Below are some of the many ways we engage with our communities.

MOREAbout Our Charitable Contributions

REDUCING INFANT MORTALITY IN CHINA

Every year in China, as many as 125,000babies die from neonatal asphyxia (theinability to breathe at birth). Of the onesthat do survive, developmental disabilitiesare not uncommon. In response to thiscrisis, the Johnson & Johnson PediatricInstitute, LLC, partnered with theChinese Ministry of Health, AmericanAcademy of Pediatrics, Chinese Societyof Perinatal Medicine, and the ChineseNursing Society to form a nationalneonatal resuscitation Program (NRP)titled Freedom of Breath, Fountain ofLife. The NRP’s mission is to reduceinfant mortality through educationalintervention by providing training tohealth care professionals in China onneonatal resuscitation techniques toreduce infant mortality during childbirth.Over 27,000 professionals have been

trained since 2004. Our goal is to have atleast one person at every hospital birth in China skilled in neonatal resuscitationby 2010. These professionals will trainthousands more, as the program workstoward its goal.

INTRODUCING HEALTH CAREERS TO HIGH SCHOOL STUDENTS......

Since 1992, the Johnson & JohnsonBridge to Employment Program (BTE) has engaged communities and Companyemployees in meaningful, ongoing dialogue with high school students on avariety of educational and career-orientedtopics. BTE provides mentoring, educa-tional development and job shadowingopportunities to students in the U.S. as well as Puerto Rico, Colombia, Irelandand Scotland. Thousands of studentshave benefited. The program helpsyoung people build solid futures byintroducing them to a broad array ofcareers in health care and providingthem with real-world experiences. TheCompany partners with the Academy forEducational Development and multiplelocal businesses, educators, parents and community-based organizations in BTE cities. For example, in 2005,Johnson & Johnson and three of its affiliate companies formed a partnershipwith institutions and parents in Cork City,Ireland to develop a core curriculum

focused on career-minded subjects andpositive mentoring experiences for 160students. During the Cork program’sfirst two years, students have participat-ed in high school exit exam preparationseminars, all-day university tours, and on-site tours at DePuy (Ireland) Limited, Janssen Pharmaceutica NV, andCentocor Biologics (Ireland) Limited.

IMPROVING COMMUNITY HEALTHTHROUGH IMPROVED WATER QUALITY

Working through the Penn StateUniversity chapter of Engineers WithoutBorders, Johnson & Johnson and its affiliate company Centocor, Inc. helpedfinance the design and building of a sus-tainable water distribution system andsanitation program that will dramaticallyimprove the quality of life and health of the residents of Kob, Cameroon.Without a sufficient supply of water, the community had suffered from poor sanitation and a multitude of water-borne diseases, many of which affectedtheir children. The project has providedspring protection and distribution lines to deliver clean water to the village.

REDUCING PRE-TERM BIRTHS

During 2007, in an effort to reduce therate of preventable pre-term births in targeted areas of Kentucky, the March

528.7591.9

544.8509.9

04 05 06 07 04 05 06 07

4.1 4.33.7 3.8

Charitable Contributions 2004-2007

Total Giving$US in Millions

Total Giving as a Percent of Worldwide Pretax Income


of Dimes and Johnson & JohnsonPediatric Institute, L.L.C., launchedHEALTHY BABIES ARE WORTH THE WAITsm,a three-year partnership with theKentucky Department for Public Health.Pre-term birth (defined as birth before37 completed weeks’ gestation) is theleading cause of infant death in the U.S.and puts babies at great risk for lifelongdisabilities such as cerebral palsy, blind-ness, and physical and neurologicalimpairment. Kentucky has one of thehighest rates of pre-term birth. HEALTHY

BABIES ARE WORTH THE WAITsm takes a“bundled” approach to reducing theknown risk factors for pre-term birth duringprenatal care and between pregnancies.Through education and outreach toexpectant mothers and their health careproviders, we are working to inspire oth-ers to do all they can to make sure thebabies in their families and communitiesare born full term, if possible. Runningthrough 2009, this initiative could bereplicated in other regions of the country,if successful in reducing the rate of preventable pre-term births.

TREATING WORM INFECTIONS IN CHILDREN

Intestinal worms affect more than 400million children worldwide. Widely foundin tropical and subtropical areas, theworms are transmitted through food and skin penetration. General symptomsinclude diarrhea, tiredness, abdominalswelling and frequent pain. In children,intestinal worms can lead to malnutrition,increased susceptibility to other seriousinfections, stunted growth, reducedschool attendance/performance and ulti-mately, decreased productivity as adults.In severe cases, worm infections can leadto death. In response to this great need for treatment, Johnson & Johnsonpartnered with the Task Force for ChildSurvival and Development to launchChildren Without Worms. This multi-regional, produce-to-give initiative

will donate up to 50 million doses ofmebendazole — a deworming medicinemanufactured by Janssen-Cilag NV — to the governments of Bangladesh,Cameroon, Uganda and Zambia. Fouradditional countries are receiving dona-tions in 2008. The scope of the programgoes far beyond the donation of medicines. Johnson & Johnson and the Task Force plan to cultivate partnerships with communities, governments, NGOs, international development agencies,foundations and corporations that canadvance the other elements of compre-hensive control such as health education,clean water and sanitation.

PREVENTING HIV TRANSMISSION TO BABIES

The organization mothers2mothers (m2m)provides education for South African HIV-positive pregnant women to preventmother-to-child transmission of the disease. HIV-positive mothers are trainedto mentor other HIV-positive pregnantwomen. Johnson & Johnson began itspartnership with m2m in 2005, openingits first sites in the Eastern Cape atNdende Hospital and Frere Clinic in East

London. More than 2,400 women were reached at these two sites.Johnson & Johnson now supports 16 m2m sites in South Africa and thousands of women have beenreached. For more information, visit www.m2m.org.

RESPONDING TO DISASTERS

Johnson & Johnson continues to identifyand respond immediately to criticalhealth needs in the aftermath of naturaldisasters. Through our disaster relief partners we identify and provide support to help communities recover andrebuild. We were a founding member of the Partnership for Quality MedicalDonations and one of the first companiesto sign the World Health OrganizationGuidelines for Donated Drugs. Some ofour 2007 responses included:

The Cyclone in Bangladesh

When a Category Four cyclone struckBangladesh, killing more than 3,000 andleaving an estimated 280,000 homeless,our disaster relief partners providedmedical modules with consumer products, over-the-counter medicines,sutures and wound care products.

Tropical Storm Noel in the Dominican Republic

Tropical Storm Noel caused extensivedamage in the Dominican Republic,Bahamas, Cuba and Haiti. Johnson &Johnson responded with monetary contributions and product donations.

Floods in Tabasco, Mexico

When devastating floods impactedTabasco, Mexico, more than a million residents were forced to evacuate theirhomes. Through our disaster relief partner, AmeriCares, we distributed over-the-counter medicines, antibiotics,wound care products, and food and water.

Providing deworming medicine to children in Cameroon.

35M O R E A B O U T O U R C H A R I TA B L E G I V I N G

Johnson & Johnson continues to identify and respond immediately

to critical health needs in the aftermath of natural disasters.

Through our disaster relief partners, we identify and provide support

to help communities recover and rebuild.

Pho

to: E

ric D

on-

Art

hur

To meet its biodiversity goal,Johnson & Johnson PharmaceuticalResearch & Development, LLC(J&JPRD) in La Jolla, CA invitedthe executive director of the

San Elijo Lagoon Conservancy to walk thecampus and advise J&JPRD on conservinglocal and regional biodiversity. J&JPRD’s La Jolla facility is situated on an urban mesa above scrub-covered canyons that drain into the Los Penasquitos Lagoon, a designatedCalifornia Natural Preserve.

Information collected during the walk-through will be used to protect indigenousflora and to control or eradicate invasive non-native plants — the basis of the site’s new biodiversity action plan. Many native

Sustainability Through Our StoriesBEYONDThe Data

plant species were observed, but several non-native plant species with invasive characteristics that range from moderate toextreme were also identified. A CaliforniaGnatcatcher, a threatened bird species thatthrives only in coastal sage scrub, as well astwo rare species of native succulents, wereobserved. The review included a discussionabout the site’s ornamental landscaping,and the possibility of introducing somenative plants that are more drought and heat tolerant in order to reduce water use.

Annual biodiversity progress assessmentsare planned and employees will receive statusreports. The public will also hear aboutprogress through the site’s annual sustainabilitytransparency report on www.jnj.com.

Conserving Biodiversity


Johnson & Johnson HealthCare Systems Inc. (JJHCS) inPiscataway, NJ has establisheda ten-year partnership with the U.S. Fish & WildlifeService to increase biodiversityand wetland habitat in theregion near their facility.Over the ten-year term ofthe agreement, JJHCS willwork on a number of landrestoration projects. During2007, they led the restorationof a pond and stream in

Piscataway, engaging employees,a private biologist, studentsand faculty from nearbyRutgers University, and community volunteers in theeffort. About 500 meters ofriparian, upland and wetlandhabitat were restored. Invasivespecies of plants along thepond banks were removedand replaced with native vegetation that will help pre-vent erosion. Similar projectsare planned for each of thenext nine years.

Increasing Wetland Habitat

CONSERVINGWATERRESOURCES

Our affiliate Centocor, Inc.,

in Malvern, PA is taking

waste condensate water

from their building air

conditioner and returning

it for use in their cooling

towers. In the first 18

months of this change,

Centocor recycled over

2.8 million gallons of water,

thereby reducing their

fresh water usage by

the same amount.

PreventingChildhoodInjuriesFounded in 1987 with supportfrom Johnson & Johnson, Safe Kids Worldwide® is dedicated to preventing unintentional childhood injuryby implementing safety programs and hands-on training throughout the world.In addition to education programs, Safe Kids also facilitates engineering modifications and works toenact and enforce safety laws and regulations. In 2007,the organization marked its 20th year with the theme,“Make it a Safe Kids Summer.”Recent research, underwrittenby Johnson & Johnson, concluded that summerrepresents the highest injuryrisk season each year. With sup-port from Johnson & Johnson, a pool and spa safety bill was also introduced in the U.S. Congress. Safe Kids hashelped produce some dramaticresults. Since its inception, the U.S. childhood death ratehas declined by 45 percent.

37B E Y O N D T H E D ATA

In December 2007, thousands of tons of oil spilled into

the Yellow Sea off the western coast of South Korea after

an oil tanker collided with a barge. It was the largest

spill in South Korean history, contaminating 167 kilometers

of western sea, including 15 beaches and 946 fertile fishing

grounds. Janssen Korea, Ltd. sent a team of employee

volunteers to clean one of the severely damaged areas. By

partnering with local government officials, the team selected

Eoeundol Beach, where cleaning progress had been slow.

Employees, many of whom abandoned their holidays for

this activity, worked hand-in-hand with local residents.

In Vietnam, the mortality ratefor children under the age offive is declining, but still high.Many hospitals and healthcare centers in Vietnam lackproper newborn care facilitiesand equipment. Midwives are not adequately trained to handle emergency cases when they arise. In 2007, theMidwife Training on NeonatalCare training program was developed to provide midwives who are trained to handle neonatal emergencies.Johnson & Johnson providedfunding for this program,which was managed by the Vietnam Reproductive

Training Midwives on Neonatal Care

Healthcare Department. Thegoals of the program are toreduce the number of infantdeaths and accidents in hospi-tals by improving the medicalknowledge of midwivesacross the country, and toteach doctors and midwivesto become trainers them-selves. Through continuededucation, this programhopes to improve the stan-dard of neonatal care amongdoctors and midwives.

Adopting Schools to Engage Employees in Community WorkAt Johnson & Johnson Medical (India) Ltd., employees are entitled to five working days of CSR (corporate social respon-sibility) leave to work on CSR projects in the community. TheMumbai facility created an “Adopt a School” program and 24 schools were adopted in the neighborhoods or hometownsof participating employees. The program emphasized infra-structure upgrades that would have a lasting impact. Drinkingwater systems and bathrooms were upgraded in several cases.Poor sanitation was one of the reasons children, particularlygirls, did not continue schooling. At many of the schools, safety hazards — dilapidated roofs and ceilings, rotting woodand electrical hazards — were eliminated.

Responding to anEnvironmental Disaster

The province has one of the lowest rates for girls completingsecondary school. Although Kenya has legislated compulsoryprimary school, girls often do not complete it due to familyroles, forced marriages and early pregnancies. WISER recognizes that women are currently the most underutilizedresource in the region and therefore, they are potentially pivotal in promoting community health.

In addition to raising $40,000 for WISER, LifeScan taughttheir employees about women’s equality, HIV/AIDS and therole of economic under-development in the region. The newboarding school will accommodate 320 girls; the former school had space for only sixty. WISER believes that the safeenvironment for educating women will cultivate the next generation of community leaders.

Five different employee diversity groups at LifeScan Inc.in Milpitas, CA came together in 2007 to support the Women’s Institute for Secondary Education andResearch (WISER) and raise employee awareness to

a dimension of diversity that serves the community. WISER is a non-profit organization working to build the first girls’boarding school in Muhuru Bay, Kenya.

Muhuru Bay is a small fishing village in the Nyanzaprovince, which has the highest HIV and malaria infectionrates in the country. The province is the poorest in the coun-try, and due to its political isolation, Nyanza has not partici-pated in the economic development that has occurred in otherregions of Kenya. As is common around the world, girls sufferthe most in impoverished communities such as Muhuru Bay.

INVESTING IN WOMEN’S EDUCATION

Sponsoring the Beijing 2008 Olympic GamesThe Beijing 2008 Olympic Games marksthe first time in history the event has traveled to China; however, for the past20 years Johnson & Johnson has beenactively involved in promoting the healthand well-being of Chinese families. Thesponsorship itself was a critical step in our ongoing commitment to the peopleof China. We created a platform to unify

our Chinese brands and enable them to speak with one voice.Under the phrase, “Yin Ai Er Sheng” which means, “because we care, we act,” we are sharing our sentiment that caring for others makes life more meaningful, and we are articulating the values that are so important to Johnson & Johnson. In thatspirit, we are providing health education to Chinese families,we are helping and celebrating people who care for othersand we are providing products and services to Olympic athletesand medical staff.

The Johnson & Johnson Medical Science Centre in Beijingis the official training center for medical personnel who are vol-unteering for the Games. Senior staff from Johnson & JohnsonMedical (China) Ltd. and Xian-Janssen Pharmaceutical Ltd. are providing training in topics including venue medical care,spectator care, emergency response, medical venue manage-ment and leadership skills.

Photo: Janea Wiedmann


Restoring a ForestOur manufacturing campus inSao Jose dos Campos, Brazil,took on the effort of planting10,000 native trees to replacethose lost to deforestation.When the desired nativespecies of trees were notlocally available, they createda nursery to produce theneeded trees. Approximately7,000 trees are being pro-duced each year. To date,3,000 trees have been plantedby employees, and thousandsmore are donated for plantingeach year to local schools and community groups.

Supporting More Solar EnergyWhen McNeil Nutritionals LLC launched its SUN CRYSTALS™

Brand of natural sweetener in 2007, it committed to donatingone percent of the revenue from SUN CRYSTALS™ sales to solar energy projects on a yearly basis, for the life of the brand. In 2007, $32,000 was committed to the Solar Electric Light Foundation, an organization dedicated to bringing sun-powered energy to rural communities in Brazil, Africa,China, India, Indonesia, Sri Lanka, Vietnam, and the United States. This money was used to fund a complete solarelectricity system for the Partners in Health clinic in Rwanda,Africa. The clinic will serve the critical health care needs of thelocal community, approximately 26,000 people. Additionally,every box of SUN CRYSTALS™ is made from 100 percent recycled paper, with a minimum recycled content of 35 percentpost-consumer content.

Partnering to Protect Coral ReefsCordis Corporation inMiami Lakes, Florida,forged a partnership tohelp incubate and restoredamaged coral reefs in theBiscayne Bay. Coral reefsare living ecosystems thathave a very small growthrate; yet, they are vital for a healthy underwaterecosystem. Covering lessthan one percent of theocean floor, coral reefs support an estimated 25 percent of all marinelife. Working with a teamfrom the Biscayne NationalPark, approximately 60 Johnson & Johnson volunteers are helping to rescue and restore seg-ments of the coral reefs.

Transforming Diabetes CareDiabetes affects more than 180 million people worldwide and is predicted to double to 360 million people by 2030.The Johnson & Johnson Diabetes Institute was established in2007 to transform diabetes care by providing training on thelatest practice standards, new diabetes tools and technologies,and reimbursement solutions. Our operating companies are investing the necessary resources to open and operate new state-of-the-art instructional facilities worldwide,starting with Japan in 2007 and the U.S., China and France by mid-2008. Through this Institute, we are determined to provide medical staff with the latest information and practicalskills so they can help their patients live healthier, longer lives.

Reducing Environmental Impacts Through

Green Science

Across the enterprise, Johnson & Johnson scientists are reducing environmental impacts through “green

science.” We have great opportunity to advance environmental protection and sustainable development at the research and development stage and our operating companies have reported a number of successful processredesigns that are delivering good environmental benefit while increasing process efficiency.

The chemical development team at Johnson & JohnsonPharmaceutical Research & Development, LLC (J&JPRD) identified an unprecedented synthesis route that more than tripled the overall manufacturing yield for tapentadolhydrochloride, a promising analgesic drug for the treatment of moderate-to-severe pain. The team’s innovative workreduced process waste volume by approximately 80 percent,eliminating the use of about six million liters of solvent per year.

Another J&JPRD improvement came from the use of supercritical fluid chromatography (SFC) technology in theexperimentation stage of research. SFC is similar to liquid chromatography but instead of using liquid solvents, it employs compressed fluids such as carbon dioxide. TheJ&JPRD facility in Beerse, Belgium now runs seven times the number of experiments they used to be able to run in a given period of time due to increased efficiency. At the same time, solvent use decreased about 70 percent.

From our Medical Devices & Diagnostics business segment,Vistakon (a division of Johnson & Johnson Vision Care, Inc.)uses silicon hydrogels to make ACUVUE® ADVANCE™ contact lenses. Because silicon materials are adversely affected bywater, solvents have long been used to remove residual impurities from the lenses during manufacturing. Vistakon hasmade significant process changes to optimize the cleaningprocess, reducing solvent use by 70 percent. Vistakon scientists hope to eventually eliminate solvent use altogether.

ENSURING POSITIVE COMMUNITY RELATIONS

To ensure open dialogue and communication at our Janssen Pharmaceutica NV operations in Belgium, the business established a toll-free phone number for communitymembers to use when they wished to share a thought or concern with Janssen. Through this mechanism of open communication, Janssen learned of issues related to odor,noise and vehicular traffic. Responses were prompt, and several facility upgrades were undertaken to address concerns. The open dialogue and resulting projects were much appreciated by facility neighbors and Janssen continuesto benefit from a positive relationship with the community.

RECOGNITION/AWARD DESCRIPTION

100 BEST CORPORATE CRO Magazine selects the 100 best companies that are proving good corporate citizenshipCITIZENS 2007 and good business go hand-in-hand.

AMERICA’S MOST FORTUNE magazine recognized Johnson & Johnson for attraction and retention of talent,ADMIRED COMPANIES, 2007 performance measurement, strategy implementation, and managing through economic

uncertainty.

TOP 50 COMPANIES This DiversityInc list is based on CEO commitment, human capital, corporate communicationsFOR DIVERSITY®, 2007 and supplier diversity. Johnson & Johnson was ranked 17th overall.

100 BEST COMPANIES FOR Working Mother magazine again named Johnson & Johnson to this list, marking our inclusionWORKING MOTHERS, 2007 every year since the list was launched 22 years ago. It recognizes our family-friendly policies

for flexible work, child-care, maternity and paternity leave, elder care and other programs and services.

WORLD’S MOST RESPECTED The financial weekly Barron’s conducts an annual survey of institutional investors. It rates COMPANIES, 2007 the 100 largest public corporations based on market capitalization, in order of the respect

they have garnered from these institutions. Johnson & Johnson was ranked second on this list for 2007.

BEST PLACES TO WORK FOR The Human Rights Campaign Foundation listed Johnson & Johnson on their CorporateGAY, LESBIAN, BISEXUAL AND Equality Index for the third year in a row. TRANSGENDER EQUALITY, 2008

AMERICA’S BEST The Dave Thomas Foundation For Adoption® recognized Johnson & Johnson for its adoptionADOPTION-FRIENDLY benefits which include financial assistance and paid leave for employees who adopt.WORKPLACES, 2007

TOP 10 BEST COMPANIES FOR Chief Executive Magazine recognized Johnson & Johnson for having the right quantity andLEADERS, 2007 quality of leaders to face an impending leadership crisis that is fueled by retirement in some

areas of the world, or by fast-paced growth in other areas.

EXECUTIVE LEADERSHIP AWARD, CNBC News Network annually recognizes executives who have shown exemplary leadership,LEADER IN BUSINESS PRACTICES inspiration and innovation. Our CEO, William C. Weldon received this award.

DOW JONES SUSTAINABILITY Johnson & Johnson stock has been included in this index since 2000. The DJSI family follows INDEX, NORTH AMERICA, 2007 a best-in-class approach to identify sustainability leaders in each industry.

FTSE4Good INDEX, 2007 Johnson & Johnson has been independently assessed according to FTSE4Good criteria and has satisfied the requirements to become a constituent of this index, which identifies companies that meet globally recognized corporate responsibility standards.

GREEN POWER LEADERSHIP This award was presented by the U.S. Department of Energy, U.S. Environmental ProtectionAWARD, 2007 Agency, and the Center for Resource Solutions for the Company’s voluntary steps

to address climate change by advancing the development of renewable energy markets.Johnson & Johnson was one of seven companies named Partner of the Year.

DISCOVERY AWARD, 2007 The American Geriatric Foundation recognized Johnson & Johnson Pharmaceutical Researchand Development, L.L.C. for its commitment to the well being of older adults, their families and the communities in which they live. PRD’s Dr. Garry Neil was honored for his outstandingbusiness, civic and philanthropic leadership.

START! FIT FRIENDLY The American Heart Association recognized 65 Johnson & Johnson operating locations, atCOMPANIES AWARD their highest level, for championing employee health and working to create a culture of

physical activity in the workplace.

CEO CANCER GOLD Johnson & Johnson is one of only 13 companies that have fully satisfied the CEO Roundtable STANDARDTM AWARD on Cancer’s requirements for cancer-related practices. The Roundtable was formed to make

continual progress on the elimination of cancer and our CEO, William C. Weldon, chairs it.

NATIONAL ENVIRONMENTAL The U.S. Environmental Protection Agency recognizes Johnson & Johnson as one of just four PERFORMANCE TRACK Corporate Leaders. The voluntary initiative is based on facility performance, exemplaryCORPORATE LEADER compliance and environmental goals that go beyond compliance.

CORPORATE LEADERSHIP AWARD The Association for Safe International Road Travel presented this award to Johnson & Johnson in recognition of our contributions to road safety through our Global Safe Fleet Initiative.

ADVANCEMENT, COMMITMENT, Healthcare Businesswomen’s Association (HBA) named Johnson & Johnson the first winner AND ENGAGEMENT (ACE) AWARD of the HBA ACE Award. The award recognizes the depth, breadth and global reach of the

Company’s Women’s Leadership Initiative, which works to increase the number of women inthe organization and develop their leadership competencies.

39

R E C O G N I T I O N S

ECONOMIC INDICATORS UNIT 2005 2006 2007

Sales US dollars, millions 50,514 53,324 61,095% change over previous year 6.7 5.6 14.6

Net Earnings US dollars, millions 10,060 11,053 10,576% change over previous year 23.0 9.9 (4.3)

Share Price (end of calendar year) US dollars 60.10 66.02 67.38

Operating Companies Number, approximate 230 200 250

Employees Number, approximate 115,600 122,200 119,200Number/$million sales 2.3 2.3 2.0

Research & Development US dollars, millions 6,462 7,125 7,680as % of sales 12.8 13.4 12.6

Effective Income Tax Rate % of income 23.3 24.2 20.4

Advertising Costs US dollars, billions 2.1 1.9 2.7as % of sales 4.2 3.6 4.4

Charitable Contributions US dollars, millions 591.9 544.8 509.9as % of pre-tax income 4.3 3.7 3.8

EMPLOYEE HEALTH INDICATORS UNIT 1995-99 AVERAGE 2005 2006 2007

Tobacco Use % of profiled U.S. employees 12 5 4 4

High Blood Pressure (above 140/90) % of profiled U.S. employees 14 10 6 6

High Cholesterol (above 240 mg/dl) % of profiled U.S. employees 19 8 6 7

Inactivity (below 30 min/day, 4 days/week) % of profiled U.S. employees 39 38 35 36

EMPLOYEE SAFETY INDICATORS UNIT 1995 2005 2006 2007

Serious Injury/Illness Rate Incidents per 100 employees 0.07 0.03 0.03 0.02

Lost Workday Case Rate Incidents per 100 employees 0.31 0.06 0.07 0.08

Fleet Car Accidents Accidents per million miles driven 8.76 4.86 5.32 5.30

Ergonomic Injuries % of lost workday cases 48 21 28 33

ENVIRONMENTAL INDICATORS UNIT 2005 2006 2007

Accidental Releases Number of events 9 9 9

Agency-Issued Noncompliances Number of events 18 11 13

Fines Paid $US 5,819 5,580 31,410

ISO 14001 Certifications(for manufacturing and R&D sites) % of facilities with certification 96 100 100

Energy Use Billion BTU (3,412 BTU per KWH) 12,961 12,920 13,126

Carbon Dioxide Net Emissions Thousand metric tons 961 891 923

Voluntary CO2 Offsets (incl. RECs) Thousand metric tons 317 395 400

Water Use Million m3 12.5 13 11.8

Non-Hazardous Waste Million kg 60.0 57.2 54.0

Hazardous Waste Million kg 35.2 38.9 33.8


D A T A S U M M A R Y T A B L E

ABOUT THIS REPORT

This report discusses Johnson & Johnson’s sustainability activities and progress as of December 2007. It is our fifthannual Sustainability Report and 11th year reporting environmental progress. In developing this report, we haveconsidered employee and external feedback on the 2006Report. The feedback was derived from our contact mailbox([email protected]), non-governmental organization engagements, senior company leadership input and threeevaluations conducted by SustainAbility Inc., ClaremontMcKenna College and Ethical Corporation.

Through these and other sources, we learned that there is strong consensus that sustainability reports are rarely readcover to cover. Instead, users typically turn to a sustainabilityreport to find a discreet bit of particular information on an as-needed basis. We also learned that readers are seekingmore in-depth discussions of a company’s priority sustainability issues.

In consideration of the feedback we received, we continueto evolve our reporting. Our 2007 report begins with acomprehensive discussion of a number of key issues affectingour business, followed by a more crisp presentation

of other sustainability topics of known interest to our stakeholders. The report is augmented by information contained on our website, www.jnj.com. The primary audience for this report is external stakeholders. TheCompany has a variety of other mechanisms by which itshares sustainability progress internally.

Information presented throughout the report representsthe manufacturing and research & development facilitiesoperated by the Johnson & Johnson Family of Companies.No external manufacturing is included in our data.

GLOBAL REPORTING INIT IATIVE (GRI )

Consideration was given to the Global Reporting InitiativeSustainability Reporting Guidelines (G3) in the preparation of this report. On the inside back cover, we provide an index with references to G3 indicators; however, we do not declare a reporting level at this time.

FEEDBACK AND FURTHER INFORMATION

We invite your comments on our sustainability activities and this report by emailing us at [email protected].

2 0 0 7 S U S T A I N A B I L I T Y R E P O R T

Cov

er P

hot

ogra

ph ©

Dav

id S

tubb

s/A

uro

ra/G

etty

Im

ages

TA B L E O F C O N T E N T S

Chairman’s Message 12007 Sustainability Summary 2About Johnson & Johnson 3Profiles in Commitment 5More About our Business Practices 22More About our Workplace Practices 24More About our Environmental Practices 28More About our Charitable Giving 34Beyond the Data 36Recognitions, Data and GRI Index 39

Caring for the world...one person at a time™

inspires and unites the people of Johnson & Johnson.We embrace research and science – bringing innovative ideas,

products and services to advance the health and well-being of people.

Employees of the Johnson & Johnson Family of Companies

work with partners in health care to touch the lives of over

a billion people every day, throughout the world.

41

I N D E X

All products and programs that appear in capital letters with the TM symbol are trademarks or service marks of Johnson & Johnson and its affiliate companies.

Other products and programs that appear in lower case letter with the TM symbol are the property of other companies and organizations.

© Johnson & Johnson 2008

“Checkmark-and-tree” logo ©1996 Forest Stewardship Council

Cert no. SW-COC-1340

This report is printed on Forest Stewardship Council (FSC) – certified paper. The paper contains 50% recycled content including 25% post-consumer waste and it is elemental chlorine free.

Printed by Pictorial Offset Corporation, an ISO 14001-Environmental Management Systems company.

KEYWORD PAGE(S)

access to health care 2, 5-7, 13accountability 11, 12animal welfare 13, 15benchmarking 22, 25, 27benefits, employee 24-25biodiversity 28, 36business conduct 10, 12, 22-23CEO letter 1challenges 1-2, 6-7, 11, 13, 15charitable giving 5-6, 22, 34-38climate change 1-2, 15-18, 20, 29-30collective bargaining 24community 3, 21, 34-38company profile 3-4compliance 10-11, 22, 28conservation 29contact us IFCcustomers 3, 14-15, 14, 23disaster relief 35, 37diversity 21, 24employee assistance 24-25employee health & wellness 1, 24, 26-27energy 16-18, 40environmental 2, 13-20, 28-33, 36-38equal employment opportunity 25external manufacturing 19-20financial performance 3-4, 40fleet 18, 29goals 1, 16-17, 19-20, 24-33governance 3, 23HIV/AIDS 1-3, 6-7, 26, 35, 37intellectual property 23ISO 14001 29marketing 11nanotechnology 12nursing 8-9packaging 15, 29-32partnerships 4, 7, 9, 17, 20, 22, 27, 29, 33-38pharmaceuticals in the environment 31policies 12-13, 16, 20, 22-23, 28pricing 23product safety/stewardship 13-15, 22, 32products 4, 22public policy 23recognitions 25research & development 1, 12-13safety 25, 27stakeholders IFC, 3-9, 11,25, 30, 32stem cells 12-13strategy 1, 3, 11supply chain 19-21, 29-30training 24-28transparency 1, 32transportation 18, 20, 25waste 13, 15, 33, 38water 33, 36-38

IFC: Inside Front Cover

LABOR PRACTICES

DMA 24-27LA1 3, 40LA3 25-26LA5 24LA7 25-27, 40LA8, LA10 24-27LA11 24, 27LA13 24

HUMAN RIGHTS

DMA 19, 22, 24-25HR1, HR2 19-20HR5 24HR6 19-20

SOCIETY

DMA 2-7, 10-13, 17-18, 22-23

SO1 29-31SO2, SO3 22SO5 5-6, 12-13,

17-18, 23, 27, 29

SO8 28, 40

PRODUCT RESPONSIBILITY

DMA 1, 3-4, 10-12,14-15, 22, 38

PR1 32, 38PR2 10-11PR5 4PR6 6, 40PR8 6

GLOBAL REPORTING INITIATIVE, G3

PROFILE

Strategy & analysis 1-2, 40Organization profile 3-4, 40Report parameters IFC, 3Governance BC, 3, 22-23Stakeholders 4, 6-8, 11,

14,17,22-23, 25, 27, 32

ECONOMIC

DMA 3EC1 3-4, 40EC2 18EC6 21

ENVIRONMENTAL

DMA 16, 28-33EN1 31-32EN2 30EN3 40EN5,6,7 16-18, 40EN8 33, 36, 40EN13 28-29, 36, 38EN14 28, 36EN16,18 16-18, 40EN17 18,29EN19 30EN22 33EN23 28EN26 14-15, 20,

29-31, 32, 38EN27 29-30, 32EN28 29EN29 18, 20, 29

12

O U R C R E D O

We believe our first responsibility is to the doctors, nurses and patients, to mothers and

fathers and all others who use our products and services. In meeting their needs everything

we do must be of high quality. We must constantly strive to reduce our costs in order to

maintain reasonable prices. Customers’ orders must be serviced promptly and accurately.

Our suppliers and distributors must have an opportunity to make a fair profit.

We are responsible to our employees, the men and women who work with us throughout

the world. Everyone must be considered as an individual. We must respect their dignity

and recognize their merit. They must have a sense of security in their jobs. Compensation

must be fair and adequate, and working conditions clean, orderly and safe. We must

be mindful of ways to help our employees fulfill their family responsibilities. Employees

must feel free to make suggestions and complaints. There must be equal opportunity

for employment, development and advancement for those qualified. We must provide

competent management, and their actions must be just and ethical.

We are responsible to the communities in which we live and work and to the world community

as well. We must be good citizens—support good works and charities and bear our fair

share of taxes. We must encourage civic improvements and better health and education.

We must maintain in good order the property we are privileged to use,

protecting the environment and natural resources.

Our final responsibility is to our stockholders. Business must make a sound profit.

We must experiment with new ideas. Research must be carried on, innovative

programs developed and mistakes paid for. New equipment must be purchased,

new facilities provided and new products launched. Reserves must be created

to provide for adverse times. When we operate according to these principles,

the stockholders should realize a fair return.

One Johnson & Johnson PlazaNew Brunswick, New Jersey 08933

JO

HN

SO

N &

JO

HN

SO

N 2

00

7 S

US

TA

INA

BIL

ITY

RE

PO

RT

2007 Sustainability Report

12